How the advent of payday loans has solved a problem with its roots back in the 18th century
Yes, believe it or not, the advent of payday loans has solved an age old problem, you probably didn’t even realise existed. Ever since the Industrial Revolution brought prosperity to the UK with widespread employment and a general rise in living standards, most workers had the legal right to be paid in cash on a weekly basis.
That system worked well for over a hundred years but was eventually replaced when the “Truck Act” which supported it was finally repealed in 1983. The main argument had been that it was not safe to be transporting millions of pounds around the country in vans and that there were realistic and much safer alternatives available. From that point, employers were no longer obliged to pay their employees in cash, or on a weekly basis. The incidence of raids on payroll departments reduced and the criminals who used to target the security companies who transported the cash from the bank to the place of employment, turned their attention elsewhere.
Although many continued to pay in cash and a few still do, most employers gradually moved to a cash-free system with money being paid either by electronic transfer into the employee’s bank account or by cheque which, although now largely disappeared, also required a bank account in order for the recipient to be able to cash it.
The bottom line was, and still is, you need a bank account in order to have a job these days – a fact that the banks are, of course, very pleased about as it presents them with unlimited opportunities to make money from its customers.
That is, many would say, just progress and is unavoidable and, whilst this is true to a large extent, it does cause some problems for many people. The disappearance of the little brown envelope full of cash handed to the employee through a little window in the wages office wall is, to be honest, no great loss but the general drift from weekly pay over to monthly pay has had a more significant effect on many people.
Monthly budgets and life’s emergencies simply don’t mix
A month is quite a long time to go between paydays as many of us can testify. A lot can happen in a month, much of it unexpected and sometimes the next injection of funds into our bank account just can’t come quickly enough.
No matter how meticulously you plan your finances and purchases, no matter how carefully you budget for the things you need, every now and then one of life’s little emergencies will happen that you just could not foresee or budget for.
There are many examples of this; the car that unexpectedly breaks down and needs an expensive repair, the washing machine that gives up the ghost just when you have a pile of washing to do, the kids need cash for a school trip – the list is long and we could all add to it with examples of unexpected expenses that we ourselves have had to make arrangements for.
If the car breakdown takes place on the day that you get paid, or just after, it can probably be dealt with but, let’s face it, that doesn’t usually happen that way. Instead, the unexpected cost usually comes at a time when you’ve either spent, or committed to spending, all of your available cash and you simply don’t have enough to get you through to the next payday.
Many short term lending solutions simply don’t make the grade when it comes to providing same day cash
For some, this can be overcome by arranging an overdraft facility with their bank but this can be expensive and the banks are often reluctant to provide overdrafts to all but the few who probably don’t need them anyway.
Others may have a credit card that they keep in reserve, “for emergencies” and that is a common enough solution but, for many, what starts off as a short term fix for a short term requirement, often ends up being a longer, sometimes much longer, commitment as the ability to repay a minimum amount each month just keeps the debt running and running.
Those who have an asset, such as a property or shares, can usually borrow against that asset and get a reasonably priced loan as required but, again, these tend to become longer term commitments to solve a short term problem. Others may use a less valuable asset such as a camera or other tangible item, to arrange a loan from a pawnbroker – a service that has seen a resurgence in popularity in recent years since it combines convenience with relatively low borrowing costs due to the lender holding an asset as security.
So called “log book loans” are also available, if you own a car outright. These loans enable the car owner to sign over the ownership of the vehicle to the lender until the debt is repaid after which ownership reverts to the borrower. Again, fine if you own the car but, for many of us, we never do – it is just another thing we budget for every month and pay over a number of years.
Payday loans are just the tool for the job
Whilst some of the above are OK for some of us, some of the time, none of them are really geared up to the situations we sometimes find ourselves in where we just need a relatively small amount for what is often just a few days. Enter the solution to just that particular problem – enter the payday loan.
Payday loans are simply short term loans, so-called because they can bridge the gap between the need for cash occurring and payday arriving. They are widely available in with UK and can often be arranged completely online without the need to visit an office or leave your home at all. You can arrange payday loans online very quickly, hence they’re often described as instant decision payday loans, with funds sitting in your bank within a few hours – all from your favourite armchair, thanks to the Internet and the payday loan company investing in online processing technology to make such a service possible. In fact, in many cases, existing customers can request additional loans via text message from a mobile phone.
More recently, payday loans have become known as loans for bad credit, which is reflected by the number of people carrying out online searches for terms like “no credit check loans”. However, whilst it’s true that payday lenders take a more pragmatic approach to lending decisions than their banking counterparts, it should be noted that payday loans are in fact suitable for all credit circumstances.
The real benefit of payday loans however is in the straightforward approach to the way in which they are sold. It pays to shop around and visit a few websites in order to find the best payday loan for you. What you will nearly always find, however, is an easy to understand explanation of just how much it will cost you to borrow the amount you need. Many websites have an online calculator that lets you experiment with different amounts and repayment periods, although these are rarely longer than one month.
When you have found a payday loan provider that meets your needs, the application process is usually completely online and you get a decision within a few minutes.
In most cases you don’t have to remember to repay the loan because the payday loans company will take their payment automatically when you get paid.
So there it is, problem solved and you can get on with your life – or the washing – thanks to the availability of safe and convenient payday loans.