What are payday loans?

If you are facing monetary problems in the short term and are looking for a quick and easy way to access credit then a UK pay loan is just what you are looking for.

So what is a payday loan?

Payday loans are small short term loans which are covered by the borrower’s next payday. With UK payday loans, you can access amounts ranging from £100 – £1500 pounds, regardless of your credit history. They are often provided by cash advance businesses, which have a quick and easy loan application process as compared to banks.

In your search for an online loan there are number of key factors you should consider to make the most out of your loan application.

These factors include:

  1. The Lending Rate
    The lending rate for UK payday lenders is measured as a percentage of the loan amount. This lending rate is known as the Annual Percentage Rate (APR); the higher the amount, the higher the interest charged, and thus the higher the cost of the loan. The payday lender Simplepayday which offer UK payday loans say they are normally faced with a risk in the event of a default since they are often backed with no collateral. Due to this they will often charge a higher interest rate as compared to normal banking institutions. Nonetheless, you should look for a lender with a low APR.
  2. The Rules and Regulations
    When applying for a loan online, you will have to sign a contract which will govern the time and methods which you will use to pay back the loan. You should read these rules carefully and make sure you understand all the requirements and what action to take in the event that you are unable to make your payments on time. Most cash advance businesses will allow you to defer your payments to the next month but with a requirement to pay off a portion of your remaining balance, thus reducing your interest costs.
  3. Your Liquidity Requirements
    Since cash loans are meant to cover short term monetary needs, it would be best to consider the time margin set by the financing institution to access the loan. Loans are normally accessed in the form of a bank transfer. Some cash advance businesses will offer same day transfers, whereas others will process a transfer in 3 days.
  4. The Application Process
    The application process is usually very quick and easy. They can either be done over the telephone or online. The basic requirement is some verification of employment or income, such as a bank statement. Since most payday lenders do not verify the borrower’s credit history, they are accessible to almost anyone who has a stable source of income.

Why might I need an emergency loan?

As we all know, life can take unexpected twists and turns both financially and any other way you can think of.

Unfortunately when it comes to finances these twists and turns are very rarely for the better. Unexpected car repairs, house repairs, and other expenses are all things that can and do crop up from time to time. Usually we are hopelessly unprepared. For most of us, our finances are stretched to the maximum already with no room to move or spare money when these things happen.

Cash lenders normally work around a fixed (short) period of time, generally anywhere up to around 30 days – indeed, until your next payday when they will need to be repaid.

There are some lenders who will lend for a little longer or even work out a repayment plan over a longer period of time but as the interest rates tend to be high with this type of loan, the shorter the term, the better.

It is important that you don’t rush in feet first because a small loan looks like an ideal fix and of course you may be stressed and worried about your finances. You must make sure that you are able to repay on time because failure to do so may in turn result in fees and a higher interest rate, both of which these specialised lenders are within their rights to do.

With this in mind, if you think that this type of loan could help you out then it may be a good idea to apply. Some of the Payday lenders don’t even require a credit check, which could be a bonus if you think or know that you have credit that is a bit below par.

They also don’t have a long and drawn out application process and in some cases will deposit the money into your account on the same day as you apply. Many of these lenders only require proof of you being paid on the date that you declare, so all you may need are payslips and bank statements. If you apply online these of course can be scanned and emailed over so no worries about delivery of these documents and the associated delays.

Using a quick loan can be a huge help when it comes to cash flow and unexpected expenses and many people have benefited hugely from them. It may be just the thing to help you get back on your feet after a setback.

Myths surrounding online borrowing

Myth One: Payday Loan Borrowers Need Perfect Credit

Many people mistakenly believe that they need stellar credit to get a payday loan. However, payday lenders base a person’s qualifying status on the size of their pay cheque, not their personal credit standing. If you earn a regular pay cheque, you should have no trouble getting a payday loan. So when you are short on cash during a financial “crunch,” you can get the amount of money you need easily and quickly.

Myth Two: The Cash Advance Application Process Is Difficult

This myth cannot be further from the truth. When it comes to applying and getting a payday loan, the application process is simple and straightforward, especially when applying on the Internet. If you use an online lender, you only need to log into their website and fill out the provided application form. The form will request data such as your contact information, employer information, your take-home pay and bank account information. After this information is verified, the lender can approve you within minutes. When the loan document is signed electronically, the money will be deposited into the bank the following business day.

Myth Three: A Borrower’s Personal Information Is Not Kept Private

Once again, the myth that a borrower’s personal information is not kept private is simply that, a myth. Your information is not divulged to the public or to private third-party marketers. Transactions you make with a payday lender are not shared with anyone else. Online loan applications are integrated with Web technologies created for safeguarding sensitive information. Therefore, you can apply for a loan and opt for a bank transfer in a secure manner. The only time your information will be given to another party is if you default on the loan and the lender hires a debt collector to obtain the money you owe.

Myth Four: The Loan Process Is Lengthy

The last popular myth about payday loans UK is that the process to obtain a cash advance takes a considerable amount of time. However, you can get a loan approved and the money deposited in your bank in 24 hours. Most of the time, the entire application process can be handled over the Internet. You will not be asked to fax or mail any documents because your personal information can be verified online.

 

 

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