Understanding the risks of short term loans
Published: Tue, 24 Jul 2012
Payday loans are increasingly being used by some people as a short-term way of borrowing money but there are risks involved.
It is very important to understand fully the pros and cons of this method of borrowing. Often these loans have extremely high interest rates and there are risks if you fall behind with your repayments.
Payday loans are basically cash advances on the salary you are expecting. They are available online and on the high street. Such loans are fast becoming a popular means of avoiding bank overdraft and credit card charges.
This type of borrowing is not suitable if you're looking to repay your loan over a long period. They are designed to be short-term loans to deal with short-term personal cash flow issues.
If loans are rolled over, debts could escalate and you could get into difficulties. You should only consider taking out this type of loan if you’re confident that you'll be able to repay the debt in full when it’s due.