As the credit crunch starts to bite in the UK with Fuel and food costs rising more and more people are finding that a small emergency such as their car breaking down can leave them short of money until they get paid. Payday Loans are becoming more and more popular for short term borrowing to get over these emergencies.
What is a Payday Loan?
When times are tight Payday Loans are a very simple and hassle free way to get a short term loan until you get paid. They are recommended to be used for short term emergency borrowing . As an example, if you have to travel to work by car due to public transport not being an option. You have a break down and you can't get to work, catch 22, no car, no work therefore loss of pay - a viscous circle. A Payday Loan may be the answer. You can apply and get the money the same day paid into your bank account.
How do payday loans work?
Very simple. Using a simple on line form on the you can apply in five minutes. There are no credit checks and you can have the money the same day. The requirements are:-
You must be over the age of 18 Your monthly earnings must be over £750 per month and you must be in full time employment You have to have a Bank account with a debit card, the debit card is used to recoup the loan once you have been paid
Who can get a Payday Loan?
You are likely to qualify if you are over 18, in full time employment and your earnings are over £750. You will also have to have a bank account and debit card.
What information do have to supply?
Generally the simple on line form requires the following information:
Your basic details such as name and address Your date of birth Your contact telephone numbers and email Your work and salary details Your bank account and debit card details
Why do the Loan Companies need all this information?
All Loan Companies have to act in a responsible manner and they need this information to verify:
That it is you taking out the loan and not someone else using your name That you are in full time employment and able to repay the loan, if not in full time employment they will not give you the Loan That they put the money in your account and no-one else's account That you can repay them in a simple and hassle-free way by using your Debit card details.
How long does it take?
5 Minutes, literally. All you need to do is fill in a simple on line form. The Loan company will generally give you an instant decision once you have completed their simple on line form. Once approved the money will be deposited into your account the same day. Please note with some banks it may take 1-3 days for the money to clear.
How much can you Borrow?
Most Payday Loan companies will allow you to borrow from £80 to £750 depending on your circumstances such as your monthly salary. The table below shows the costs of Payday Loans:-
Amount Borrowed Amount you repay
£80 £100 £100 £125 £200 £250 £300 £375 £400 £500 £500 £625 £600 £750 £750 £937.50
If you look at the Typical APR of 1845% this sounds horrendous so lets have a look at some comparisons of other forms of lending.
Type of Loan Amount Months Total repayment APR Actual InterestInstallment £500 36 £745 16.9% 49% Installment £500 60 £970 16.9% 94% Payday Loan £500 1 £625 1845% 25%
So now you can see the difference. The longer term loans seem to have much lower interest rates (APR) but in reality you will end up paying a lot more back then you borrowed in comparison to a Payday loan, this is why payday loan companies always focus on the actual amount you will pay back not the Interest rate. Personally I think that if I needed to borrow money for an emergency I would prefer a payday Loan to a normal long term loan as it will be cleared the next time I get paid.
How easy is it to pay back my Loan?
Very Easy - the agreed repayment amount would be debited by the Loan company from the debit card that you registered on the on line form on your next payday - there's nothing else for you to do.
Can I defer my payment?
Yes - although after deferring the payday loan twice they will ask you to start reducing the balance. Deferral will incur new charges for every month the loan is deferred - but still at our fixed rate - there are no additional charges.
What happens if your bank account details or the day you get paid changes?
If your payday has changed, or you have a new debit card, just contact the customer services department and they will change your details straight away.
What if I have problems paying?
Payday Loan companies understand that people's circumstances can change. If this is the case, you must let them know as soon as possible and they will always do their best to help.
The most important things to note are:
Do not get a Payday Loan if you are unsure that you will be able to pay it back when you get paid. If you are having difficulties then contact the Loan company as soon as possible. Do not bury your head in the sand and hope it goes away.
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