Generation Rent & Debt

Currently in today’s society, the younger generation are increasingly finding themselves in all sorts of debts whilst at the same time finding it hard in regard to working their way up the property ladder. However, with payday loans becoming more popular with the nation, we are beginning see how they might help you in those tight emergency situations, thus getting yourself back on the straight and narrow.  With everything becoming expensive in our society, we are finding ourselves frequently out of pocket, yet with the option of a payday loan; it give us something to help us on a urgent situation whilst implementing a structured and safe payment plan with the payday loan company you are using.

Payday lending can be pretty expensive but if you find yourself struggling and are in urgent need for short-term cash, a payday loan from an FCA approved lender can be one way to see you through a temporary financial emergency. With a number of regulations and caps implemented by the FCA,  regulated UK lenders are required to lend responsibly. This means a loan should only be approved when the lender knows the applicant can afford the repayments. The lender should be confident that by lending a cash loan the applicant will not get into further financial difficulties. The idea of a payday loan is to help out those who are in a financial emergency, however, a payday loan may not be a suitable option for all circumstances, due to high interest rates and fees on late repayments. Payday loans should only be used in a finance emergency, as a one off. Numerous times throughout our lives, something unexpected will occur forcing us to pay out a significant amount of fees making our financial schedules sway out of the expected. Some may turn to relatives or families, others may have access to other affordable forms of credit. Where these options are not available, a short term loan can be an alternative way to see you through to the next pay day, however, as mentioned previously, it is important to ensure the loan repayments are affordable for your circumstances.

The property ladder

Because rent prices are increasing far beyond the amount we take from our wages, a situation is surfacing where we are forced into spending 50% or more of our wages towards our rent. This can lead to many beginning to feel rather stressed due to the lack of funds. While some may turn to the bank, some might be turned away, and this can have a negative effect on a person’s credit score, making it even harder to borrow money in the future. It’s proving rather difficult for the younger generation in regard to getting themselves on the property ladder.  Mortgage payments are becoming too high and are crippling the younger generations, this mixed with buyers needing house deposit of a minimum of 10% can make it increasingly difficult for people to purchase their own home. The reason why it’s called a property ladder is due to the fact not all of us buy a property and stay in it forever, many of us buy a starter home and build equity and then move onto a larger property. However, how can we build this equity if the money we are bringing in does not cover half of our outgoings?

The reality is young people will have to find a way they can prioritise their finances, as to not be depending on expensive forms of credit such as payday loans and gradually build up their finances. It is important to remember that payday loans should never be regularly relied on, and should only be used as a short-term solution for a financial emergency. A payday loan can be an option for those who are in need of emergency funding, who can afford repayments, but who do not have a cheaper form of credit available to them at the time.

In addition to this, you may be able to get an instalment loan which helps you to manage the money that you pay back in a more affordable way. Instalment loans can be more flexible as they allow customers to spread the cost of the loan over a longer period of time, rather than paying it all back in one lump sum. Instalment loans also typically have a fixed interest rate and repayments are equally divided throughout the course of the loan term. The media attention to payday loans is negative, but with tighter regulations implemented by the FCA, you will find that payday lenders can offer a great sense of security for those who urgently need help.

A key thing to always remember is to plan your budget if you can straight after payday. We have put together a comprehensive guide to budget planning to help you organise and plan the steps required to manage your income. This will help you to work towards a financial end goal, such as paying off debt or saving for a house deposit in order to get on to the property ladder.

Generic advice is not a service regulated by the Financial Conduct Authority.