An overdraft facility is a common entity these days, indispensable to some and a last resort to others. Either way, it is a something which hardly stimulates much interest or emotion from anyone. On the other hand, mention the concept of a payday loan online and you may encounter a furrowed brow of disapproval. Why?

Well, it is hard to ignore the bad press several outlaw organisations have received over the last few years and deservedly so. Misleading advertising, targeting of the weak and downright aggressive collection tactics. How could we think any way other than negatively? We couldn’t. And we could be forgiven for doing so. Scandal sells.

However, for those that dig a little deeper than the headlines, there is considerably more to the subject than the tabloids would have you think; the truth of which could save us a small fortune.

Recent evidence following a Simple Payday investigation has confirmed that charges imposed to overdrawn bank accounts are often much higher than the costs associated with a same day loan. In spite of many banks recently reviewing their fee structure, the difference can still top £170.

payday-loans-vs-overdraft-chargesFor example, were you to exceed your overdraft with Lloyds TSB by £100 for 20 days, the charge would be up to £200. The same scenario with one of our lenders would result in a charge of just £27.90.

(Lloyds TSB account: unauthorised overdraft charge of £20 per day for maximum 10 days)

It is also worth considering the size of such companies when justifying charges. What exactly does the £170 fund for one of the world’s largest banks? Admin? Of course not, simply extra profit for an already super-wealthy business. Lloyds are indeed not the only guilty party, as most of the top lenders on the high street also top £100 in charges under the same circumstances.

So where does this leave you when you’re desperate for a quick cash-injection and your account is about to breach? The reliable high-street giant or the alternative, oft frowned-upon option? Think carefully…

Exorbitant costs!

Much of the negativity directed toward short-term cash loans is the ‘exorbitant’ cost attributed to late or non-payment. So why is the same not true for the big lenders with even higher costs? Perhaps the bigger the organisation, the further they can be distanced in our minds from the seedy, back-street loan sharks we hear about all too often. The smaller, developing businesses sadly do not have this luxury.

Despite what some would have us think, there is a world of difference between short-term lenders and loan sharks. The clue is in the wording; payday lenders are official, registered companies who are obliged to disclose all information up front and uphold a legal contract. Loan sharks answer to nobody and should be avoided at all costs.

Of course, charges such as these need not be a consideration if the account holder maintains 100% control of their finances at all times. No charges, no problem. But who in all honesty can make such a claim? Some, but not many. If you don’t fall into this scarce minority, give it thought next time you find yourself in a hole. It can’t hurt and you might well come out on top.

The number of pawnbrokers operating across Britain has more than tripled over the last decade, continuing a timeless tradition of exchanging valuables for quick cash. Instant payday loan companies, on the other hand, have positively exploded on the High Street, quadrupling the number of services on offer during the last five years alone. Needless to say, both are extremely popular and increasingly so. The recent economic downturn has resulted in something of a reluctance from the major lenders to help out the little people in times of crisis, prompting more and more of us to seek alternative sources of emergency finance. So, if both pawnbrokers and payday loan online providers offer exactly that, which is the better option?

Explaining the tradition of ‘pawnbroking’

Carrying a rich and colourful history to say the least, pawnbrokers today operate in a more or less identical fashion to their original incarnation over a century ago. Small sums of money, generally of around £50 and upwards, are provided in exchange for collateral in the form of valuable items. The amount borrowed, plus service fee and interest, is paid back by the borrower, at which point the item of value is returned and everyone’s happy.

pawnbroker

Of course, if the cash is not paid back in full or within the agreed repayment period, the pawnbroker keeps or resells the item as compensation. Needless to say, the traditional image of the pawnbroker is less than glamorous, with desperate souls pretty much trying to sell the clothes of their back for a few extra quid here and there.

Payday loans in the UK

Loans with us on the other hand, though a relatively new presence in the financial world, often face unfair association with loan sharks of old resulting in an equally Dickensian image to that of the pawnbroker. The fact of the matter is nothing could be further than the truth.

overdraft charges or pawnbroker chargesThe modern provider is an official, registered financial organisation abiding by the same codes of conduct and standards of practice you would expect from any major lender. Furthermore, when applying for a payday loan there is no requirement for collateral or security in any form, which is great news for anyone who really would rather not leave their Rolex in a backstreet Aladdin’s Cave for a week or two.

If cash is needed quickly, there really is no faster way than the online payday loan. The application can be completed and approved in seconds, with the cash following pretty much instantly. True, several of the larger pawnbrokers have established on online presence allowing their services to be accessed from home, though this is a little redundant if looking for a rapid result, as posting your items of collateral and waiting for an appraisal is hardly a swift process.

The choice online is clear

So in answer to the question as to which is better, it somewhat depends on individual preference, but if you’d rather keep your belongings where they belong and get the cash you need in quickest manner possible, the answer isn’t a tricky one.

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Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk