How it works
We explain the ABC's of payday loans
Have you recently over extended yourself and taken one too many credit card cash advances? Perhaps you've tapped your existing credit line and are wondering how payday loans work and what they can do to provide you with instant cash. Well, if that's the case, don't despair.
Much like the name implies, a payday loan is an advance to cover an individual's expenses in-between pay periods, and whilst most providers insist on those amounts being repaid between these periods, there are others who allow borrowers more time to pay off the loan.
However, as far as whether payday loans are like conventional loans, ones where banks and credit unions decide to lend people money and extend credit based on the applicant's credit rating and history, well, that simply isn't the case. With a payday loan, the individual's credit history plays no role in the decision to lend money. So how is this possible? More importantly, how do payday loans work and what must applicants know before applying?
What is the Approval Process on a Payday Loan?
Applicants applying for a payday loan in the UK must be able to provide proof of employment, be a legal resident or citizen, having a telephone number and address, and have a chequing account that will accept direct deposit. Some services insist that applicants be employed for a given period of time before becoming eligible for the loan. However, this depends upon the company providing the payday loan. Most online loan providers are able to boast over a 95% approval rating, making a payday loan one of the easiest loans to secure.
How Much Cash Will be Advanced?
Initial loan amounts depend upon the service provider's threshold and tolerance on risk. Some payday loan providers will insist that initial loans be tapped at £80 to £300. However, all will increase those amounts on future loans. The focus is on making sure borrowers understand the process. No need taking on more loans than one can afford.
Who Uses Payday Loans?
Most assume that payday loans are used by individuals unable to secure credit with other lenders. However, this simply isn't the case. Individuals from all walks of life, and all kinds of professions, use payday loans to cover them in-between their pay periods. Whether it's for an emergency, or to cover that impromptu purchase, today's payday loan providers are used to helping borrowers meet their obligations.
Why Don't Payday Lenders Review the Applicant's Credit History?
Unlike bank loans, credit lines and credit card companies, a payday loan provider isn't interested in the applicant's credit history. Their main concern lies with the individual's ability to provide proof of employment. Some providers ask applicants to fax them information, whilst others simply require the applicant fill out the information online. The applicant's proof of employment is all the collateral that's needed to advance the funds.
How Fast Does it Take to Access the Cash?
Most payday loan companies provide their loans the same day. In fact, most applicants are able to access their funds online, within minutes of having completed the application. This makes payday loans as easy-to-use as credit cards or debit cards. The cash is transferred directly to the individual's named bank account, and that money is easily accessible at any cash machine in the UK.
Payday loans are simple to repay. They are used to cover expenses, pay bills or to cover purchases between pay periods. The terms are easy to understand and the conditions easy to work with. However, like all forms of credit, payday loans must be managed accordingly. When they are managed properly, they can play a vital role in repairing the individual's credit rating. For that to happen, the applicant must only borrow what they can afford to pay back.
How we help you
By applying for a payday loan through paydaylenders.org.uk, you are giving yourself the best chance of being accepted for a quick loan - we put your application in front of a panel of 20+ lenders to assure the highest acceptance rate. If you have:
- Bills that need paying and haven't got the funds
- An emergency and need quick cash today
- Money worries such as not being able to afford something but you know you can pay it back when you get paid
Paydaylenders.org.uk can help you with securing a short term loan to tide you over until your next pay packet.
