True Blue Loans versus Payday Loan

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Representative Example: Representative 1286.98% APR on a loan of £300.00 with 5 monthly repayments of £101.03 Total amount repayable £505.13 Annual interest rate (fixed) 290%

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Author: Internal Marketing Department

 

Before I begin, I would like to clarify what I mean by a 'payday loan' as while the term is nowadays used more widely, when I first experienced payday loans they were repayable in 1 instalment on your next payday. I will therefore use this definition throughout my article. 

Convenience of payday loans is the prime attraction that lures many low-income workers to regularly top up their income using them. Working class people as such have to struggle to pay their bills on time. The unfortunate thing is, when some people opt for payday loans to improve their finances, the unavoidable consequence is sinking even deeper into debt because of the extremely high cost.

Payday lenders have had a bad reputation of "ripping off low-income workers" as say the banks, some church leaders and politicians. Concerned organizations have pointed out how payday loans are ripping off borrowers' money from their poor financial situations. This is why the regulator in UK has passed rules regarding this controversial lending method. The regulations passed by Financial Conduct Authority (FCA) ensure that the borrowers never have to pay back more than double of the amount they have actually borrowed. Even then, for a working class citizen, paying double the amount borrowed is not something that could be concluded as an easy feat.

Why is it so complicated? Let’s take a look.

Payday lenders sometimes charge up to the maximum of £24 per £100 of loan per 30 days. If you take out a payday loan for 15 days for an amount of £100 and you get charged £12, the total amount owed by you would be £112 at the end of the said 15 days. How is this math working out for you? You provide £12 charges for 15 days meaning up to £0.80 each day. If you think this is not that substantial for a short term loan then you would be correct. But what if you now had to find the £112 in one go? What if that were not doable. Then you would need to rollover or extend the loan. Now the FCA have been sensible here too. In days gone by you could rollover your loan indefinitely, month on month, each month you would pay another £24 per £100 but not reduce the debt. Nowadays you cannot do this more than twice and even then the lender has to ensure that in doing so the new loan is affordable.

Now let’s take a look at the other alternatives to this problem of finding the whole amount in 1 go that will not put you in the rollover trap. One answer is Short term loans such as True Blue Loans.

Advantages of True Blue Loans:

·      Flexible and hassle free: The motto of True Blue lenders is that the loan should be hassle free and flexible. That is why they offer a number of services that could fit your needs. The range of short term loans they offer is impressive and lets you choose your own terms of repayment over 3, 5 or 6 months.

·      AffordabilityTrue Blue loans are in all the sense of the term, affordable. They provide a number of repayment options that can be chosen from to meet anyone’s monthly budget.

·      Affordability assessment: While processing a loan, True Blue assesses the customer’s financial situation. Instead of giving out loans to everybody then applying harsh methods to recover it, True Blue checks whether the consumer can afford the loan or not. If not, the application is denied. This is not the customer’s responsibility. It is the responsibility of the lender to assess the situation. This helps the customer’s financial situation and does not hinder it.

Why True Blue Loans or short term loans such a big deal?

Another great feature of the True Blue loans is that the application for this loan does not require any additional fees. So unlike some payday brokers, True Blue does not charge you just for taking into consideration whether you are a suitable applicant or not. This gives you the opportunity to fill out the application as you desire without worrying about what charges you are required to pay for doing it.

 So if you are looking for a short term loan and are not exactly sure about how you can pay it all back and in what time, True Blue comes forward as the effective solution for that. This is really helpful in terms of affordability. And if you can’t really afford to pay in a short time, you can opt for longer durations such as 5 months or 6 months. You pay a daily amount of interest so that you will save money by repaying early. So it is up to you how fast you can close the loan without paying any charges at all for repaying early.

Payday loans allows none of these flexibilities. You may not save by shortening the pay period. And if you lengthen the pay period, then you are mandated to pay even more interest than you originally expected. People often have had to take additional loans just to pay off the debt from their prior pay day loan. Which in turn leads them even further down in financial crisis.

So be smart and go True Blue!