One of the main reasons Payday Loans can be very expensive due to the high interest rates on these loans. Not only that but failing to repay the loan within the agreed upon time frame would also trigger penalties and fees which quickly overwhelm many borrowers.
Payday loan lenders also have direct access to your bank account, meaning they can make deductions from your account. This may be to cover fees you didn’t realise you owed, which were hidden in the fine print.
Payday loans can be an effective short term solution for unexpected expenses. They are useful for those who are in the right situation to benefit from them. More often, however, payday loans are being used as a long-term debt solution- which can have serious consequences.