What are Pay day Loans?
Pay day loans or pay day advances as they are sometimes referred to are basically a form of bridging loan, these loans are designed to tie you over as the name suggests to your pay day, usually this is when the full loan plus interest has to be repaid, some pay day loan lenders will offer to roll the loan over a second month but be aware the interest rate or APR% is generaly high, there are pay day lenders who charge a fixed fee based on the amount you need to borrow, this is typically around £25 per £100 borrowed, so consider this when deciding on the pay day lender. Pay day loan amounts usually range from £80 to £1000, companies offering pay day loan services can give you an answer in minutes and the money will be in your bank account very quickly.
Am I eligible for a Pay day Loan?
Pay day loan lenders who specialise in this area do have customer criteria, the forms are straightforward and not to detailed, if you have poor credit history then pay day loans may not always lend to you and you may have to consider other types of short term loans, however they can also be one way of improving your rating, pay day lenders will use credit reference agencies but don’t let that put you off, as long as you meet the requirements set out below you’ll usually get the decision in a couple of minutes.
Usual Requirements for Pay day Loan
- Be over 18 years old
- Be in permanent employment
- Earn more than £750 net per month
- Have a bank account with a valid debit card
How Much Is a Pay day Loan going to cost me?
Pay day loan repayment periods are short, as such most lenders APR% look ridiculously high, but 3000% APR can be misleading, the shorter the period the higher the APR% or annual percentage rate looks, it’s the “annual” in APR that is the important thing to note when comparing the true cost of borrowing, for example a lower APR% but over a longer period may end up costing you more, always look at the amount you wish to borrow over how long and how much you will have to pay back, make sure you can afford the repayment before you enter any agreement. Break the agreement and the lenders will impose additional charges, so be aware of these before you agree to any payday loan or other type of loan. What purpose can I use the Pay Day loan for? Anything is the simple answer, as long as you’re comfortable with the repayment date, but as with any form of loan ask yourself “do I really need this” can you wait till pay day to pay for your car repairs or to get a new TV, Pay day loans are great for a quick short term loan but if you need to borrow money over a longer period then these forms of loan are probably not right for you.
Some Important Information Regarding Payday Loans
If you find yourself having difficulty in making your repayments you should contact your lender and inform them of the situation, they can then discuss payment options with you. It is better to deal with the problem rather than ignore it.
Always try and make your repayments on time as this will avoid possible late payment penalties and extra fees. Should you not repay the loan the lender may involve debt recovery agencies to collect the debt, this may also add additional fees to the original outstanding debt. A mark may be added to your credit record which could prevent you from securing further loans in the future or the loans offered to you could be only available at a higher rate of interest than those offered to people with a better credit score.
Late Payment Information
Late payments will usually mean additional charges being added to your debt, the amounts vary between lenders but can be typically as much as £100 so it is advisable to check these and any other possible charges prior to agreeing to your loan.
Be aware of automatic renewals when taking out Payday loans, non payment or late payment of the original loan could trigger an automatic renewal with further charges and / or interest added. If you would like to renew it is advisable to contact your Payday lender prior to the end of your existing repayment period, explain what you want and agree the new loan interest charges and fees, this way will usually result in more favourable charges than automatic renewal.
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