If you find yourself needing money in a hurry, you may think that a payday loan is the best option for your needs. While there have been many stories in the media outlining the dangers caused by payday loans, the companies that offer these loans have undertaken extensive promotional campaigns to convince people that they are a suitable and viable option for any financial problems. It is important to note that sometimes payday loans are a viable option, but in many instances, it is a poor option and one that should be avoided at all costs.
One of the most important elements regarding why payday loans are not always suitable revolves around the high APR that is found on these loans. The APR, or the Annual Percentage Rate, provides the percentage figure, which will indicate the total sum of money that a person will pay back in interest for their loan. Payday loans have received a great deal of criticism because the stated APR for their services is astronomical compared to the vast majority of loan options that are available to people. Some of the payday loan firms have presented a defence saying that as the loans are paid back within weeks, there is no need to focus on the APR.
You should always focus on the APR
This is a defence that throws up a red herring because if you are looking to compare loan options, the APR is a reliable and effective way of comparing. Ideally, you should be looking to find a loan with as low an APR as possible, and this is not something that you will find with payday loans.
Guarantor loans are different though and this is where the benefit of having someone vouch for you really starts to pay off. As there is guarantor with a good credit rating, regardless of the borrower’s credit history stands at, the payday loan company will be confident about receiving their money back and being paid online. This means that there is a smaller level of risk for the loan firm, which means that they are happier to charge a lower level of APR to applicants. You will find that a guarantor loan low APR rate is possible to achieve, and it should be a big factor in why you decide that a guarantor loan is the best option for your needs.
No matter what sort of loan you are looking for, you should always look for the APR and the lower the APR, the better. This is why obtaining a guarantor loan is usually the best solution for any financial issues you may have.