The Inside Track On Payday Loans
Not everyone needs a full fledged loan. Some people just need a bit of cash to tide them over till the next pay cheque. And there's now a way for them to get it. It's called a payday loan.
Payday loans work a bit like pawnshops. With a pawnshop, a customer took an item in, got cash for less than the item's value and had to pay the value back to get the item back. Payday loans operate on the same principle, but the process is fast and often online.
Quick Cash With A Payday Loan
A payday loan is a way to get cash quickly and almost anyone can get one. You just need to be over 18 and a UK resident. And of course, you must have been employed (for at least three months) and have a bank account that your pay goes into. Meet those criteria and you could qualify to get some quick cash. The amount of cash you can borrow depends on your salary. It could be anywhere from £50 to £800 if your earnings are high enough.
Unlike other loans, there is no hard credit check or background check for a payday loans. The most lenders will ask for is proof that your salary has been going into your bank account. That means you might have to show bank statements. You don't even have to give a reason for wanting the loan. Best of all, you usually get the money within a day, paid right into your bank account. Finding out if you can get a payday loan is as easy as filling out a form on the Internet, where there are several lenders.
How To Repay A Payday Loan
Repayment for payday loans is due on your next payday, usually within two weeks or a month. Interest on the amount borrowed is added to the loan amount and you give the lender a post-dated cheque for the full amount. You can also agree to have the money come straight out of your bank account. Extending the loan period will attract additional fees. Fees are charged either as a percentage of the amount borrowed or a fixed fee per loan.
With payday loans it is essential to make repayments promptly otherwise more interest gets added and the total amount could go up very quickly indeed. This is a good option for quick cash and once approved, you may be able to get further loans from the same lender without having to go through the approval process again.
The interest rate charged on payday loans is extremely high (some estimate an APR of 300%), so payday loans are not a good long term plan for managing your finances. However, they can be useful for getting out of short term financial difficulty.
The key thing with payday loans is to make sure you never borrow more than you can pay back when you get paid. Payday loan companies are in it for the money and they will not hesitate to get a collections agency involved if you default. This could seriously damage your credit rating.