This week has seen payday loans come under criticism from debt advice groups who claim that some companies are charging excessively high interest rates on this type of loan. The debt advice groups are calling for a cap on interest rates for payday loans however, the Office of Fair Trading (OFT) responded to this by stating that payday loans would be covered by investigations of the issue of responsible lending and that although the loans, often used by people to tide themselves over until they get their wages, generally attract high rates of interest, the businesses offering them are properly licensed, professional and responsible.

UK payday loan providers also responded to the criticism by explaining that higher interest rates are levied on payday loans to reflect the level of risk being taken by the lending companies.

As one would expect, the payday loan companies claim they are providing a valuable service to customers who may be unable to get credit elsewhere. However, this claim is supported by the rapid rise in popularity of the products offered by the payday loan companies as they provide a real alternative to unauthorised overdraft charges, pawnbrokers and loans from friends or family.

Payday loans do not involve a credit check and for this reason they are sometimes referred to as bad credit loans. No credit check means that these cash advance type loans are therefore available to those who are unable to get other forms of credit such as credit cards, traditional long-term loans or overdraft facilities. The loan companies do however require proof that the applicant is currently employed and that their next pay cheque will be more than sufficient to repay the loan in full.

Many payday loan customers report that by getting a payday loan they are able to resolve their immediate cash-flow crisis and buy themselves a little bit of breathing space in which to assess their finances and to get advice on how to manage their money better.

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It would be lovely to have a crystal ball to be able to see into the future but alas such things are merely the stuff of myths and legends. In reality, when it comes to predicting our finances we have to rely on known facts and try to set aside enough money to cover the events that cannot be predicted. Since this is more of a guessing game than an exact science, it can be extremely difficult to accurately predict future demands on our finances. The current economic climate makes the task even more onerous, with many people facing the threat of redundancy, pay freezes or cuts to their working hours.

It is therefore unsurprising that fewer people are willing to enter into long-term loan arrangements given that these require a lengthy commitment to regular repayments. Sadly, without the afore mentioned crystal ball, there are often times when unexpected circumstances require more cash than we have in either our current account or savings account. There is no need to get into long-term debt to resolve situtations like these as the financial institutions do offer short-term lending products.

One such short-term loan product which is increasing in popularity is payday loans. This is where the lending company furnish an individual with a cash advance on their salary on the condition that the cash advance, plus interest, is repaid in full as soon as the individual’s next salary payment is made. This means that the absolute maximum duration of the loan agreement is 30 days.Not only does this mean that long-term debt can be avoided but there is the added bonus that the repayment is due at a time when the borrower actually has sufficient funds to make the repayment.

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My two boys usually spend their summer holidays with their grandma. As a working mom, my mother’s unfailing devotion to her grandsons is a total god send as I never have to worry about organising (or paying) for childcare during the school holidays.

This summer however is going to be different. After England’s disasterous performance at the World Cup, my boys have decided that their country needs them and so they have enrolled on a football skills summer camp convinced that this will result in them playing for England at the next World Cup. Since they are only 7 and 10 years old, this may be a little ambitious but never one to want to quash their dreams, I have agreed that they can go to camp.

It wasn’t until I found the letter stuffed at the bottom of my eldest son’s PE kit that I realised the level of expense that I had committed myself too. I had an even the bigger shock when I was completing the enrollment forms and learnt that I had to pay the entire amount in full, for both boys before the end of the school term. This threw me into a blind panic as I had just paid for our family holiday and didn’t have enough money in my account to pay for the summer camp as well as feeding us for the rest of the month.

I discussed the matter with my husband and since neither of us wanted the boys to miss out, we decided that I should get a payday loan as this would enable me to pay for the boys’ summer camp and then simply repay the loan as soon as I got paid.

I was surprised by how easy it was to apply. Once the boys were in bed, I went on-line and used Google to search for payday loans. This brought up a list of uk loan providers and I chose a company offering to credit my account within the hour if I was approved as this meant I could withdraw the cash on the way to taking the boys to school. It took just a few minutes to complete the online payday loans application form and thankfully I didn’t have to fax anything because I was able to scan and upload copies of my id, payslips, proof of address and bank account details. This saved me the hassle of having to use the fax machine at work! In the time it took me to make a cup of tea, I had an email from the loan company informing me that my payday loan application had been approved and the money would be credited to my account within the hour.

It was such a relief to be able to go to bed without worrying about letting my boys down. The next morning, I stopped off at the cash machine and took out the money to give to the boys’ teacher for their summer camp.

Not only are the boys delighted to be spending their summer playing football but my mother has decided to treat my Dad to their first summer holiday since the boys started school.

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