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Understanding Londonderry Payday Loans For Short Term Borrowing Needs

This article explains how Londonderry payday loans offer an option for short term borrowing for residents of the city. Payday lending allows people a way to borrow some money to tide them over until the date of their next pay packet or benefit payment. Payday loans are not generally a suitable option for those who need to borrow money over the longer term. Many lenders are member of the Consumer Finance Association, a trade association whose members are committed to responsible lending.

Payday loans are short term loans, usually repayable in a few days or weeks, typically on the date that the next pay-check or benefit payment is due. These are unsecured loans, which means that no collateral is required, as would be if money is borrowed from a pawn shop.

Payday loans are form of borrowing which is often available to those who are unable to obtain an overdraft facility or a credit card, due to having a poor credit rating. The costs when calculated as an APR (annual percentage interest rate) can be extremely high, but the trade association for the industry, the Consumer Finance Association, point out that the loans are designed to be paid off in a few days or weeks, and therefore state that using an annual figure for comparison is unfair to their members. The CFA also state that payday loans can work out cheaper than unauthorized overdraft charges from a bank.

Many payday lenders are members of the Consumer Finance Association, a body whose aims include the promotion of responsible lending and borrowing. Members of the CFA undertake not to target people with debt problems, or to lend to those who cannot afford to repay.

It is important for customers to realise that this type of lending is designed for, and is most suitable for those who have a short term need for money. This mainly applies to people who have an expense to pay now, for example to replace a broken appliance such as a washing machine, and who will be able to repay in full when they get their next pay or benefit check.

Payday loans are not a suitable form of borrowing over the longer term. The charges and interest which are incurred if the debt is "rolled over" will quickly add up, making the debt much more expensive than a bank loan or a credit card debt.

Many people who take payday loans are unable to access other forms of credit, for example they cannot obtain a credit card or an overdraft facility. Although a payday loan can help with a temporary financial shortfall, in cases where the inability to obtain credit is due to substantial existing problems with debt, or with an inability to manage household budgeting, people may also find it advisable to obtain long term help with their financial problems. Charities such as the Citizens Advice Bureau and the Consumer Credit Counselling Society can offer free and confidential debt counselling, reviewing all the options available for a person with debt problems.

Londonderry payday loans are designed to be suitable for short term borrowing needs, but other forms of borrowing may be more appropriate for longer term credit needs. The Consumer Finance Association's members undertake not to target those with long term debt problems. Those in such financial difficulties may find free and confidential debt counselling, to be helpful.

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