What are the implication of pay day loans?

 I used to get loan from website call Wonga to pay my tuition fees. It started from £300 then  I had to pay £500. then £ 400 to £800, £1000 to £1700.So i had to pay every month and I couldn't end it.Because all my earnings I had to pay them and of course I had to spend money on my rent bills , phone bills ,transport cost etc. Therefore I had to borrow money from someone else.

• They're high cost, short term loans with more tricks than Paul Daniels .Payday loans are short-term lending often used by people to tide them over until payday. They're often very easy to get – some even do it on mobiles while drunk which makes them feel convenient. But it's that very ease which is the danger. If you don't think about what you're doing, it can be a nightmare.

Payday loans charge more for a month than credit cards do for a year1,000%+ APRs are mostly meaningless apart from as a welcome scareIf you express the typical charges payday lenders make as APRs most work out as over 1,000%. This is a useful warning against what can be dangerous products, but these APRs are mostly meaningless. That's because if you borrow over a very short term, even a small fee can become an astronomical APR.

If you're regularly getting payday loans, there's a problem
If you can't repay it on time, you can't afford to get one

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Beware the rollover – it's only a lottery win for lendersSome payday loan companies actively encourage you to roll over your payments - where they extend the time over which you are borrowing the money, and hit you with more interest for the privilege. Beware any lender who encourages you to roll over your loan for another month.

Borrowed once? They'll try to seduce you again

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Payday loans can hit your ability to get a mortgage - even if paid on timeApply for any credit, and lenders 'score' you to predict your likely behaviour. They use data from credit reference agencies as part of this (see the Credit Scores guide). But a payday loan on your credit report can have a striking effect. All credit reference agencies differentiate payday loans on your credit report. They’re in a different section, so underwriters (who make lending decisions) can tell how much and how often you've used payday loans.

They'll take your (or parents'/friends') money whenever they want

A common tactic of payday lenders is to ask you to pay using something called acontinuous payment authority (CPA, also known as a recurring payment). This is where you tell it the 16-digit number on the front of the card. This gives the lender the right to take a payment whenever it wishes. For those on the brink of being able to pay their bills each month, this can be perilous. A commercial lender swooping in and diminishing your bank balance may mean you are unable to pay something else, possibly a priority debt like council tax.
Payday lenders can be bad – loan sharks are 1,000x worse!

What do I need to watch out for with payday loans?

Payday lenders usually charge a fee instead of an interest rate. Typically, a £100 loan for a month has a fee of around £25, so you need to repay £125. To put that in context, if you borrowed the same amount on a bog-standard credit card at 20% APR, then provided you didn't miss any repayments, it would cost £20 to borrow £100 for a YEAR - £5 LESS than payday lenders charge for just one month.

Why do they have to put these APRs if they're meaningless?

Payday loans should never be used as a way to fill the gap between your incomings and outgoings in a month. If that's happening to you, there's a fundamental problem that a payday loan will only make worse not better. The most important thing to do is to sort out a budget, to try to balance your costs and income.

It's very easy to get one payday loan for a small amount, then another the next month, and before you know it, you're in a debt spiral, as happened to forumite leopardxgirl:

If you do go for a payday loan, the crucial point is that you know how you are going to pay it back. If not, then you can't afford the loan. No matter how desperate you are, the end result will leave you much worse off (see payday loan alternatives).

If you feel desperate and that it's your only option, even though you aren't sure you'll repay it, you'd be far better getting one-on-one debt counselling help from a non-profit debt counselling agency.

What happens if I roll over my loan?

If you do repay on time, there's still a big danger lurking. The payday loan company knows you're a 'good' customer - it's successfully made money from you. So it knows if it lends you more money you're likely to be able to repay, making it even more money.

This is a major concern. You may have only taken a £100 loan to pay a few bills until your next payday. Then after repaying, the lender tries to tempt you by offering a larger amount with even bigger charges. Always resist this, even if you're offered a 'discounted fee'! It's often just a ploy to get you to borrow more.

My lender says getting a payday loan will improve my credit rating. Is that true?

My payday lender advertises 'no credit checks'. Isn't that a good thing?Can payday loans stop me getting a mortgage?

How can I cancel a Continuous Payment Authority?

Payday loan companies, though they may lay traps for you, have a credit licence (check at the FCA Consumer Credit Register). So if things go wrong, you have some limited room for recourse. But loan sharks are a completely different beast. They're unlicensed, they break the law, often go knocking door-to-door and at worst use they horrific methods - including violence and threats of violence against the borrower or their family or children - to get their money repaid