There is an unfortunate reality that many individuals live from month to month, pay day to pay day with no savings. Its normal for them to have no money left just before their payday.
When an unexpected and urgent need for cash appears, there is no money available to solve the problem. Examples may include vets fees, car repairs, unexpected mobile phone bills or even urgent utility bills that appear each quarter instead of every month.
As people with low monthly incomes have to prepay for things like electric and gas, such people can often find them selves with no light or heating if they have no cash for their prepay meter.
Families with young children can sometimes access a line of credit from the social who are unwilling to let a family with young children sit around in their homes with no electric.
For single individuals with less of a social safety net they are often trapped and forced into a doomed spiral of exploitation from predatory loan companies. Imagine the following scenario. Dave is a trainee plumber on a minimum salary. He was out of work for 6 months and defaulted on his credit card, his full status bank account went past his agreed borrowing limit and the bank closed it and sold on the debt to a debt collector. He was pulled up by the police while driving his van with two bald tyres. The officer was not impressed with his attitude towards him and ordered a tow truck to tow his car away.
Dave was stuck with no car to get to work and no money to get it out of the impounded facility and buy the new. The daily fees for storage were pilling up. His friend he drank with told him to go on the web and look for a no credit search pay day loan so he could sort out his travel issues. His bad credit would be no problem as there was no credit search.
Dave was open-minded and happydocuments to the finance company £350 arrived in his bank account, enough for his tyres and the tow truck and daily storage fees. Everything went well until his payday when the pay day loans company removed £437.50 from his account. He was able to pay his rent for his bed-sit, put some diesel in his van and then he was back to his empty bank account.
After a friend of his expressed his anger with Dave continually smoking his cigarettes and using his mobile credit, Dave decided he was sick of having no cash. Dave made a quick telephone call and the pay day loans company were all too willing to lend him £500. Glad for their "help" Dave was able to have a few nights out and buy his own fags. His payday came round again and £625 was removed from his bank account. Also, a couple of months ago he was stupid enough to give his visa debit card numberempty the remaining money.
Dave sat alone in his bed-sit with no cash trying to work out how two bald tyres could have cost him £350 and a ludicrous £275 in interest payments and fees.
The sad and unfortunate moral of the story is using lending products from lenders who charge APR rates in the thousands of percent is rarely the solution to any problem. Giving out details of your employer and access to your bank account is something that nobody should ever do. It is not good to do this and can lead to identity theft and all sorts of unpleasant things could happen as a result.