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In the United Kingdom the short term loans market has blossomed in recent years. The failure of big banks to cater to the underbanked and unbanked sectors of British society has given rise to payday loans online. A payday loan is a short-term loan designed to tide you over until your next paycheck. It is not a viable solution for individuals or businesses seeking capital for investment purposes. The structure of a payday loan is relatively easy to understand.
The first order of business is selecting your desired loan amount. Regulated payday loan providers offer short term loans up to £1,000 in the UK. Once you have picked the payday loan amount you would like to borrow, you should determine the timeframe within which you will repay it. Note that the longer the repayment period, the higher the rate of interest levied on the payday loan.
The application process for payday loans online is quick and easy with some lenders. Some of the licensed and regulated payday loan providers make it possible for you to complete your application process within several minutes. Once you have submitted the requisite information, and all the checks and balances have been completed, you can receive a response instantaneously. Payday loan providers require full details of the borrower, including name, surname, residential address, banking details, and your employment information.
All FCA regulated payday loan providers are guaranteed safe and secure, as they use secure socket layer encryption (SSL) and the highest encryption protocols to protect the integrity of all registered clientele. The next step is the approval process. Once your loan has been approved by the payday loan provider, you will have a chance to scrutinize the loan terms and conditions. This agreement allows you to understand precisely how much you will have to repay. At this point, you can accept or reject the contract.
Once you have signed on the dotted line – virtually – and you past all the necessary affordability checks your loan agreement is ironclad. The funds will automatically be transferred into your account and you can use them as you see fit. Typically, the better payday loans online providers will transfer your money within the hour. Before you pick a payday loan provider, it’s important to understand whether it is up to the challenge. Not every online loan company is fully licensed and regulated to offer you a fair deal. Be sure that you understand the APR (annual percentage rate) as this is a vital component of your payday loan. The best way to check this is to consider what will be the amount in British pounds you will have to repay. Payday loans online are an effective means of receiving bridging finance in between your pay cheques.
If you find yourself a little short during the month, owing to additional financial commitments, or eventualities – you may wish to consider a payday loan over a traditional bank loan for a number of reasons. Before you get started with short term loans, it’s important to evaluate the pros and cons of traditional bank loans and payday loan providers. Remember: banks are increasingly strict when it comes to providing lines of credit to customers. They require mounds of paperwork, and the denial rates are increasing. With payday loan providers, you have a greater chance of being approved, even if your credit score is not perfect. Provided you are gainfully employed, and you agree to the T&C you are likely to be approved for a payday loan up to £1,000.
Payday loans must be viewed as short term loans. They are not viable options when it comes to long-term loans given that the APR on a payday loan could be with some lenders as high as 1,500% or even more.
Fortunately, the Financial Conduct Authority (FCA) places strict controls on payday loan providers to ensure they are compliant with UK laws. According to the FCA, if you borrow £100, the total amount that you repay in interest and/or fees is capped at £24 over 30 days. If you don’t need that repayment in a timely fashion, you will pay interest on the amount that you borrowed and an additional £15 fine with some lenders. The FCA has made it impossible for payday loans providers to charge you more than double what you initially borrowed.
It is important to understand terms and conditions such as Continuous Payment Authority – or a CPA. If you agree to allow a payday loans online company to take recurring payments from you, they will debit your account on the repayment dates. Be sure that you have sufficient funds in your account to cover these CPAs. Additionally, you will want to ensure that you don’t go into overdraft since the bank will levy high fees on your account ,some times more that the interest charged on a pay day loan. Sometimes, clients will default on their payday loans, or will be unable to make the repayment.
If this happens, talk directly with your payday loans provider to see if they can work with you. A loan calculator is a great way to ascertain whether you can make the monthly payments. Always calculate the interest rates that you will have to pay on these loans if you extend them for a period of time. A payday loan is a workable solution provided you have the means to repay it in a timely fashion.
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