Short term loans where you borrow £50-£1000 get a lot of bad press. These loans are usually known as payday loans and you borrow money for a few weeks until you get paid, when you will be expected to pay it back. These can cost a lot of money and this is why they get criticised. Not only is the interest higher that many other loans, but the charges can be higher as well and so many people do not feel they are good or fair.

However, there are some positives to these loans as well. The borrowers need no credit check, which means that many people can borrow money, who would normally not be able to. Some say that this is a bad thing as vulnerable people are being given something that could get them in to more trouble financially. However, if they are only borrowing a small amount of money and manage to pay it back when needed plus interest, then there is not a problem.

When the loans can cause problems is when people borrow more money than they can pay back. It is therefore important to make sure that when you have to return the money and the interest that there is enough to pay it back. It will be due to be paid back on pay day, so there should be money coming in and so you will need to ensure that it is enough.

Short Term loans

Not paying the loan back on time will lead to fees and this can be a big problem for many people. Some may decide to take out another loan to repay the first one. This can be bad as it may lead to higher and higher loans being taken out, month after month until there is no way the loan can be repaid. This is a serious problem, but again, if the borrower ensures they can pay back the amount that they can borrow, then it need never be a problem.

So some people do find the loans cause worse problems for them and they wish that they had never had them. However, there are people that find that they are extremely beneficial and they use the money, pay it back on time and everything is all the better for it. It depends on how much you borrow, what it is for and whether you can pay it back on time.

By Jasmina