Payday loans are short-term loans that help you when you need money right away and don’t have access to other sources of credit. Though they can help you in a tight spot, payday loans come with high interest rates and fees, so they aren’t the best choice if you are facing financial troubles or if you want to borrow money on a more permanent basis. If you’re thinking about taking out a payday loan, here’s everything you need to know about payday loans in the UK.
The Benefits of a Payday Loan
The best payday loans UK aren’t a silver bullet, but they can provide some much-needed cash without collateral. This is especially true for low-income borrowers or those who have no credit score. Payday loans are easy to obtain (sometimes within minutes) and hard to argue with when compared with unsecured credit cards, which come with higher interest rates and a lengthy approval process. If you have bad credit or can’t use your savings as collateral, a payday loan could be one of your only options if you need access to quick funds.
The Costs of a Payday Loan
Payday loans aren’t free and you won’t be able to take out a loan for no money down. Payday lenders charge a fee for every single payday loan, which is typically about 15% of your total loan amount. If you pay back your loan in full on time (usually with one payment when your next paycheck hits), you’ll end up paying $15 dollars per $100 dollars borrowed. But if you make late payments or can’t afford to pay back your loan on time, then it will cost even more; many payday lenders charge additional fees like renewal fees and late fees, so keep that in mind before taking out a loan.
How Much Can I Borrow?
The short answer is that you can borrow anywhere from £100 up to £500 for a 2-week period. Lenders are required by law to let you know exactly how much you can borrow, and that includes telling you how much interest and fees your loan will cost. On top of that, many lenders offer convenient repayment plans so you don’t have to pay off your payday loan all at once. Before applying for a payday loan, though, make sure it will be an effective solution—and take some time to weigh out your options beforehand. Payday loans aren’t right for everyone—and sometimes there are better alternatives!
What do I need to apply?
The first thing you need to apply for a payday loan is your paycheck stub or a copy of your bank statement. This will verify that you have an income and that you are working, which makes up one of two main requirements for payday loans. If you are receiving benefits from a governmental agency like unemployment insurance, it’s best not to apply for payday loans until those benefits expire. In many cases, those benefits will expire before your next paycheck arrives.
Can my family help me repay my loan early?
Payday loans are designed so that they can be repaid early, even though doing so can incur additional fees. But it’s always better to pay off a loan as quickly as possible—this will save you more money than if you let it sit for an extended period of time. Before taking out a payday loan, make sure that your family is on board with helping you repay it on time each month.
What happens if I miss a payment?
If you miss a payment, you will be charged a fee and interest on whatever amount you owe. It’s crucial that you make your loan payments on time because any delay can damage your credit rating. To protect yourself from late fees, set up automatic online payments or reminders with your bank or loan provider.
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