The Alternative to Payday Loans – for Unknown

Payday Loans

The payday loan industry has been a constant source of controversy since 2008 when short-term lending first emerged as a credit solution for cash-strapped consumers. It is well known that the coalition government has fought hard to implement more stringent regulations within the industry, with Prime Minister David Cameron recently pledging to cap the interest rates applied by payday lenders. Whether this comes to fruition remains to be seen, but there is certainly a drive among political powers to safeguard British consumers. Learn more about payday loans on this dedicated website:

The Alternative to Payday Loans and the Importance of Financial Education

While capping interest rates would represent a sensible move by the government, there is a more simplistic way of counteracting the negative impact of payday loans. This would be to improve the levels of financial education prevalent among consumers so that they were able to develop a greater understanding of payday loans and subsequent foresight to explore more viable alternatives. After all, payday loans represent only the most extreme form of short-term lending, and consumers are fortunate that they have access to less risk-laden borrowing options.

Take guarantor loans, for example, which are available through a number of reputable providers such as the 1st Stop Group. These allow for the extension of credit over a 12 to 60-month period and are readily accessible to applicants whose credit scores have been impacted by economic hardship. So while they have similarities to payday loans in that they are unsecured and feature a relatively short-term financial arrangement, they carry much lower rates of APR (Annual Percentage Rate) and there deliver far better value for money. Take 1st Stop, for example, who offer guarantor loan rates of 49.9% on credit extensions of up to £5000. You can also visit this website to get details about finance management.

The Last Word in Short-Term Credit

Payday loans are synonymous with short-term lending, but this does a great disservice to the credit industry and the diverse range of financial products available. Guarantor loans and other short-term financial arrangements offer far more balanced terms to applications while reducing the annual APR and affording debtors more time to repay their liability. There are also more stringent regulations associated with guarantor loans, which means that both lenders and consumers are afforded greater protection in the case of a missed payment or a defaulted agreement. So all things considered, it is important that you are able to differentiate between the numerous types of short-term available prior to making a financial commitment. Are you interested in learning more about payday loans? Take a look at this website for useful information.