Preventing a payday loan disaster – tips for debtors in Scotland

October 10, 2014

Payday loans are provided to thousands of UK consumers every month and they’ve emerged in recent years as a very widely-used form of credit across Scotland.

The idea behind payday loans from the likes of Wonga, Quick Quid and Sunny, to name just a few popular providers, is that they should be used for brief periods and paid back in full within a matter of days rather than weeks or months. Unfortunately, even the best laid plans often go awry and many thousands of payday loan users find themselves unable to pay back the amounts they’ve borrowed on the date they intended to.

Failing to pay back amounts borrowed as intended is very common among consumers in every country and context but payday loans are a source of so many debt problems today because they involve what are widely regarded as being sky-high rates of interest. As a result, failing to pay back a payday loan in full and on time can quickly lead to very serious and continuously worsening debt issues.

If you’re worried about payday loans and your ability to pay back the money you’ve borrowed then you are far from being alone and there are always steps that can be taken to improve your position.

Here are our tips for payday loan users: 

Avoid adding to your payday debts

If you are already dealing with payday loan problems then warnings against using them might not be much help. However, it bears repeating that anyone facing financial difficulties as a consumer should try not to add to their payday loan debts under any circumstances because the consequences can be very damaging to your financial situation.

Deal with payday loan debts as soon as possible

Part of the problem with using payday loans is that providers of them often subsequently have access to your bank details and can demand payments without having to communicate with you as a borrower beforehand. This can lead to bank charges when demands for payments go unmet. All of which means payday loan debts can be extremely difficult to shake off and to escape once they are encountered. Anyone faced with debt problems should therefore look to exit their payday loan deal at the earliest possible opportunity and as a matter of urgent priority.

Use (almost) any means necessary to pay off your payday loan debts

A typical payday loan is taken out on the basis of annual interest rates in excess of 1,000%. Or, to put it another way, it costs more to borrow an amount of money for a month via a payday loan than it does to borrow that same amount for a year via an ordinary credit card.

So if you have any means whatsoever of satisfying your payday loan company, short of using loan sharks or resorting to any sort of criminality, then that option should be seriously considered and probably pursued as a way of resolving your debt problems.

Focus on underlying issues

If you are finding yourself regularly in the position of needing to use payday loans as a means of making it through the month, you should look at the underlying issues you’re facing.

Can you change what you spend your money on each month?

Could you make savings with a little more commitment to cutting your everyday expenses?

If you can and you’re using payday loans regularly then there is a lot to be gained from doing so.

Timing is everything

The term “payday loans” hints at the idea that they are intended primarily as a very short-term form of borrowing and for the purpose of helping people make sure they have money enough to last them until their next pay day.

When used for a matter of days at a time, payday loans can be genuinely helpful but as soon as one week becomes two and two weeks becomes four, users of payday loans very often find themselves struggling even to pay off their interest charges.

So, in the interests of your own financial security and future, it’s very important to only consider payday loans as a very short-term financial solution and to pay off any amounts borrowed on the exact date you’ve intended to wherever possible.

Get help from Scotland Debt Solutions

Facing up to payday loan debts can be extremely challenging and stressful but you don’t have to do it alone. We at Scotland Debt Solutions can help you to find a way of tackling your problems and become debt-free.

It can be hard to admit that you need help with your debt management problems but if your payday loan debts are spiralling out of control then it’s very much in your interests to get the support and advice you need as soon as possible.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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