Rules of Thumb for Mums When Getting Quick Cash

rp_147803285.jpgThese are tight financial times, and many mums are finding it more difficult to scrape together the funds they need to get by on a monthly basis. This is driving many to explore payday loans as a means of making ends meet.

Traditional loans are reserved for bigger purchases, and the drawn-out approval process means it takes longer to get cash in hand. Opposite this, quick cash is available on short turnaround, but it generally carries a higher interest rate.

Fortunately, the government has stepped up on behalf of borrowers to levy more stringent regulations on the consumer credit market. In April 2014, The Guardian reported that as many as half of all payday lenders may choose to shut down operations rather than comply with these new regulations. This is good news from a consumer standpoint, as it means that those lenders who remain in business will offer more reliable lending products.

As any financial advisor will tell you, saving money ahead of time is almost always preferable to borrowing. However, there are instances in which mums need cash—and they need it now (family emergencies come to mind). When instances like this arise, a payday loan can be a useful tool. Just make sure that you adhere to the following rules of thumb when seeking out quick cash:

Find a reputable lender.
According to an article published by the BBC, there are upwards 240 payday loan firms operating in the UK alone. Of these, 20 per cent handle the vast majority of the lending. In other words, you have plenty of options to choose from. That means you can afford to shop around and find an above-board lender such as Cash sorted . Specifically, insist on doing business with lenders who meet the following criteria:

  • Offer a direct line of contact so that you can resolve any issues that arise down the road
  • Submit to government-imposed regulations
  • Offer a relatively low interest rate (realistically in the 15 per cent range)

Pay it back ASAP
The interest rate attached to a payday loan can be deceptive. Since the repayment terms for fast cash loans are relatively brief, it’s easy to get confused about the real cost of that loan. Look for lenders who are willing to convert their interest rate to an annual percentage rate (APR), as this makes it much easier to calculate the cost of the loan.

If you absolutely must take out a payday loan, repay it as quickly as possible. Furthermore, resist the urge to take out another next month. Habitual use of quick cash becomes extremely expensive.

Reserve fast cash for emergencies
There’s a time and a place for a payday loan. Generally speaking, that time should be limited to bona fide cash emergencies. Suppose, for example, that your car has broken down, but you rely on it to get you to work each day. Fixing your car will allow you to continue earning money, so a payday loan makes good financial sense.

Likewise, matters of health and well-being justify paying higher interest rates. However, if you are eager to purchase a television for the living room, but don’t have the cash to pull that off at the moment, you are better off saving money first. In this case, a quick cash infusion is going to dramatically increase the cost of that television set.

Budgeting beats borrowing
In a previous post, we talked about the importance of budgeting in family finance. If you find yourself turning to a payday lender just to make ends meet, then you probably need to dramatically overhaul your budget. Sometimes, simply putting off a non-urgent expense or two can be all it takes to get back on track. For example, if you can get by on half a tank of petrol for the remainder of the month, then put off filling the tank so that you can keep more liquid cash in your wallet. If, at the same time, you end up getting a bit more exercise by walking or cycling when you might otherwise have driven—then all the better.

Prioritise payday loan debt
Finally, if you have multiple lines of credit—say, a mortgage, a car loan and a credit card—you’ll want to prioritise your high-interest debt. Payday loan interest compounds much more often than other forms of debt, so pay this one down first.

Willard Torres is writing for Cash Sorted, a company whose online presence is based at, is a specialist when it comes to helping loan applicants find the right lender and service for their needs.


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