Find yourself without the money you need to get through the month and you can get into a situation where you need to make use of some rather dodgy lending agencies to tide you over. We have probably all heard of the payday cash advance and all the problems it causes to those who use it. With high interest rates and very short loan periods you end up paying back far more than you lend, and if you can’t repay on time you face large fees that make them even more expensive.
The major disadvantage of the payday loan is that the people who use them often end up taking out more loans to repay the ones they already have, which encourages them to get into more and more debt until a point at which there is no one else to borrow from. The end result is that you are incapable of paying any of them back and you end up bankrupt.
In the same vain as the payday type product there is the logbook loans UK, which fewer people have heard of because they are newer and a little harder to get hold of due to the fact that you need a car to use as security for the loan. With your car as collateral the lender has a type of insurance that they will get their money back so you can get access to more cash and you can take it out over a longer period of time. Again the interest rates are extremely high and the only people who would ever want to use them are those who can’t get cash anywhere else.
The other negative of this fast cash loan is that you are putting your vehicle on the line in order to get it, which means that the lender can turn up at your door and take possession of your car when you can’t repay your debts on time. It will then be sold at auction to raise the cash you owe and you’ll be left without your form of transport. This product is best left well alone if you value your financial freedom.
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