FAQ

What are payday loans?

Payday loans are a form of short term credit where you borrow against your next paycheck. The money can be provided immediately and deposited into your account today, and repayment of the loan will be made in full on your next payday, or in some cases over your next two paychecks. As a payment for payday loans you are charged interest as well that is to be paid back along with the principal amount of the loan at the time of repayment.

How do I apply for a Payday Loan?

Thanks to the online marketplace, applying for a payday loan is easier than ever. Simply visit a payday loan provider’s website, or a payday loan comparison website such as safepaydayloans.co.uk. A payday loan comparison website will provide much more information before applying and will also have a link directly to the lender’s individual website. When you reach the lender’s website, there will be clear instructions on where to click to apply. Fill out the necessary information, and you will receive your approval decision within seconds.

How Do I Know if I’m Getting a Good Deal?

By browsing through payday loan comparison websites you should be able to get an idea of what the typical interest rates are for payday loans. The interest amount charged may be higher for companies that have a higher maximum loan amount, so if you only need to borrow a small amount you should look for companies that have a loan range within that amount and not much higher. You also want to read through the lender’s terms and conditions to make sure you are comfortable with what they require. Additional information on each lender can be found by searching online for reviews written by borrowers in the past. It is always better to have more information than less, so take advantage of what the internet has to offer in this regard.

When Should I Get a Payday Loan?

You should begin researching the options of payday loans when you have an immediate financial need outside of your available current cash supply. This could come as the result of a medical emergency, an unexpected educational expense, a broken down vehicle that you need for work, as a buffer while you are waiting for the first paycheck at a new job, or any other number of countless scenarios where you have an urgent need for cash. It is important to get an accurate and complete snapshot of your current financial situation before taking out the loan to make sure that you are able to repay the loan when the term of the loan is up. Generally the loan decision is up to you, but if what you need the cash for is worth more than the interest charges for the payday loan then that is a good indication that you should take out a payday loan.

What are the Requirements for a Payday Loan?

You are required to prove that you are a resident of the UK. You are also required to prove that you are over 18 years of age and have a valid debit bank account. You will also need a valid phone number and address. Most importantly you will need to have proof of current employment. This can be from a recent paystub or a bank statement showing consistent income that you receive from some reputable source. If you meet all of these criteria than you are fully able to take advantages of the opportunities and relief that payday loans can offer.

Are Payday Loans Responsible?

That is a question that is a big issue for many people who are in a situation where they could benefit from taking out a payday loan but are hesitant due to the stigma that has been attached to short term credit as a result of negative media attention.

The issue that is lauded by critics is that of circular debt. This occurs when borrowers take out more than they can repay and end up having to take out additional loans in the future to roll over the previous balance, resulting in high interest charges for the borrower in the end. This can be a huge inconvenience and a big financial danger, but it can also be quite easily avoided. What needs to be done to prevent the scenario of the debt cycle is appropriate planning.

Planning for a payday loan basically involves having an accurate and complete perspective on your own personal finances. This includes all bills, income, and personal expenses of any kind that you spend money towards on a regular basis. Having an accurate estimate of all of these things makes it possible for you to know how much money you can use to pay back the debt with on your next paycheck. If you require more than one paycheck to pay the debt; that can sometimes be made to happen as well.

Another consideration when discussing the responsibility issues involved with payday loans is the consequences of not having the cash on hand. When you don’t have enough money to pay the bills while also having enough food to eat, anyone would choose to buy food and suffer the overdraft fees from the bank, late fees on credit cards, service disconnection and reconnection fees for utilities and internet. It becomes increasingly clear when thinking of payday loans in that light that they will end up costing you far less than you would be paying out of pocket for these penalties. There is also the consideration of the drop in quality of life as you are trying to scrape by without enough money for basic essentials. In most cases of financial emergency, you would be far better off taking out a payday loan and eating the interest cost the cost of those fees.

How Long can I Take Out the Loan For?

Payday loans are intended as a short term financial instrument made to provide relief to those who have jobs but are without cash until their next paycheck. Therefore, the repayment is typically supposed to occur within one month’s time. In some cases exceptions can be made depending on the circumstances, but at any rate it is typically most responsible to pay the loan back as soon as possible and responsible. Loans that are taken out for longer periods will involve higher interest, which makes them both more troublesome to repay and will also make the borrower feel less satisfied with the transaction in general. There are times, however, when the interest will be outweighed by the urgency of need that you have for the cash, and in these cases you may be best off taking out a loan that is to be repaid over a couple pay periods.

Are There Any Credit Checks When I Apply?

Some companies will require a credit history check, but there are also numerous lenders who either do not require a credit history check or who have very broad expectations, meaning that almost anyone will be approved for a payday loan.

What is the Most That I Can Borrow?

The most you can borrow will typically be no more than £1,500. It is more helpful to think about the maximum amount that you can pay back in the future. Most people would not wish to pay back any more than £1,500 on their next paycheck, and it is simply too much of a risk for lenders to extend any more credit than that without any collateral.

How Does the APR Work for Payday Loans?

Payday Loan APR is usually presented in the form of number of pounds per 100 pounds borrowed. What is typically seen is £25 per £100 borrowed. This amount is added to the principal amount of the loan and is totaled to make your repayment amount.

The interest is quite high when it is translated to an APR in the same way a credit card or mortgage APR would be presented, but it is important to keep in mind that you are only using this debt for a short duration. Payday Loan APRs are typically only charged for two weeks to a month, and they represent the amount of risk that the lender is taking by offering these quick cash loans with no collateral to be protected with in case the borrower defaults.

Another consideration of payday loan interest rates is that the amount you will end up paying in interest is very likely much less than the costs and consequences that would arise as a result of not having the money to pay for the regular necessities of life as well as bills and other expenses. Consider bank overdraft fees for unexpected or forgotten debit card charges; service interruption and reconnection fees for utilities, and late fees for credit cards and other bills. Not to mention the cost of the discomfort that you experience from simply having to pinch every single penny. You will end up much happier simply taking out a payday loan and eating the cost of the interest.