If you are thinking of taking out a payday loan read this first.

The Payday Loan Cycle

If you borrow £200 one month you will pay around £60 in finance charges. This may seem reasonable as a one off if you are desperate for the money and if you can't get credit elsewhere because of a poor credit rating. When you pay it off on your next payday and you end up with a £260 hole in your finances. By the end of the month you are desperate again so you take out another loan. You may even rollover the loan and just pay the interest, deferring the balance until your next payday. If you do this 4 times in a row you will have paid the company £240 in interest to borrow the same £200 over 4 months! And you still owe them the original £200 that you borrowed.

I know you won't think that you will fall into this trap but you most likely will.

It is very easy to get caught in a cycle of most, or even all, of your salary being taken up with finance charges and loan repayments.

The APR's are extortionate. An example from some of the companies you can find online is below.

Payday UK: 1845%
Wonga.com: 2334%
QuickQuid: . 1351.7% - 9889.3%
1monthloan: 2339 %
Wageday Advance 1286.1%

These APRs are all quoted from the companies' own websites.

If you are desperate for cash and are considering taking out a payday loan then please read the alternatives to payday loans section.

Payday loan companies are loan sharks who prey on people that are desparate for money.