Many people today accuse UK payday lending, as a form of legal loan sharking. This idea is baffling, when compared the only similarities between loan sharks, and UK payday lenders, is they lend money and expect repayment of the loan. When a person looks at illegal loans sharks, they should notice that when a person defaults on their loan, there is the possibility of violence and other recourse for repayment of the loan. When a person considers a UK payday loan, if a person defaults on the loan, no one will break there legs or attack their families. Yes it will damage the person’s credit, their bank account can be garnished and legal action can be taken. This is a far cry from the violent and aggressive retrieval of defaulted loans.

There is a difference people!

The interest rates and finance charges are considerably different as well. With a UK payday loan, a borrower, can expect to pay around twenty five percent of the loan in finance charges. With illegal loan sharks, this amount can be in the area of fifty to seventy five percent. Again, this is no comparison. The only similarities are, illegal loan sharks and both lend small amounts of money with an anticipated maturity dates, and they both charge finance and or interest charges.

The main reason that people are accusing UK payday loans of being legal loan sharking, is because the interest rates are higher than traditional lending options. The problem with this thinking is, some are not able to gain bank loans, or do not have the time to wait for the approval process, or even that the bank loans normally only offer a minimum of £1000, this amount may be well over what the borrower needs. People who do not have perfect credit, generally will not qualify for a traditional bank loan, UK payday loans just offer another option. The UK payday lenders offer small amounts that are designed to help a person out during a financial strain. This is ideally repaid at the borrower’s following payday, including finance charges. This is a convenience service, and can be a real life saver, in a time of need. If one was to compare the interest charges of a UK payday loan, and the interest charges of an unauthorized overdraft at the local bank, these numbers are fairly close, and only vary by lender. This is a consideration that is not readily made by those apposed to UK payday loans.

 



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