What are Payday Loans?

There are many people that have opinions about payday loans and it can mean that often people feel a bit wary to even consider them. However, it is a good idea to make sure that you know all about them before you decide whether they are the right loan for you. You could find that they are very different to what you expected and that they might suit your needs at some point in time. Therefore, it is well worth finding out a bit more about them and then you will be able to work out whether you feel that they will be a useful loan for you to use at some point. They have several features which are different to most other types of loan and these are the things that you should note so that you can decide whether it will suit you better.

Can Borrow with a Poor Credit Rating

Most lenders do a through credit check before letting anyone have any money as they want to make sure that the borrowers will be able to be trusted to repay their loans. With a payday loan this is not done, as the lenders specifically want to help those people that cannot borrow elsewhere. This means that if you do have a poor credit record, perhaps because you have not been paying loans back on time or you have never had a loan so cannot prove you are trustworthy, then this might be an alternative option for you.

Can Arrange Quickly

These loans can be arranged very quickly. This is because the lenders assume that people will be borrowing for an emergency. Therefore, some lenders might be able to organise for the money to be with you within a few hours of you applying. There are also some lenders that will be open at weekends or overnight so that you can borrow money outside of normal working hours. This will vary between lenders though and so you will need to check with them if this is a service that you require.

Can Borrow Small Amounts

With payday loans you can normally only borrow up to £1,000. This means that you will normally be borrowing a manageable amount. Some lenders will have a lot more money on offer and this can mean that you accumulate more debt which could be hard to repay. Obviously, we sometimes need to borrow huge sums of money, such as when we buy a home, but normally we need smaller amounts and so it is best to try to borrow the minimum that we can.

Repay Fast

A payday loan has to be repaid quickly, unlike a mortgage. Loans will normally last just a few weeks as you repay everything you owe when you next get paid. You repay in a lump sum, which will include both what you have borrowed as well as the interest and fees. It is therefore important to make sure that you carefully calculate whether you will be able to afford to make this substantial repayment or else you will end up having to pay an extra charge or fee. It is pretty easy to work this out though, you will just need to look back at previous bank statement to find out what you pay out for essential s and how much you earn to see if you will have enough and then be careful to budget to ensure that it works out for you. This can be great for anyone that does not like the idea of being in debt for very long and will mean that you will soon be free of debt again.

Leave a Reply