If you find yourself in a financial emergency in the middle of the month and wonder how you can get to your next Payday, it can be hard to know where to turn. You may not be able to ask for help from your family or friends for any reason, and increasing your discoveries may simply lead to ongoing charges.
Payday loans could be the answer you are looking for. These are small, short-term loans designed to help you with temporary cash shortages and emergency payments such as repairs. When used properly, they can get you out of trouble while avoiding bank charges or direct refunds returned.
Here are some of the main benefits of payday loans:
Easy and quick to apply
Payday lenders and brokers usually offer a quick and straightforward application process, which means you can usually apply in minutes and get an answer on the same day; and you will often get the loan in your bank the same day. For example, Payday Pixie has a 5 minute application form and can often transfer you money within 15 minutes.
Payday lenders will typically post initial prices and costs, including interest rates and calculators telling you how much you will pay back. This means that there are no surprise fees or hidden costs and you can plan in advance safely knowing that you can afford to clear the payday loan balance in full.
The amount of the loan you can borrow is usually based on your income and expenses, which means you can never borrow more than you can afford to repay. This prevents you from falling into the debt cycle; subtract the loan, use the money to cover your emergency and pay off the next payday.
The new UK rules that came into effect in 2015 set realistic limits on how much you can borrow and which you will have to repay. Interest and fees have been capped and default fees also have a limit. In addition to this, the total cost of fees and interest is capped at 100% of the original loan amount, which means that you will never repay more than twice what you originally borrowed.
Unlike other types of loans, Payday Loans are flexible to meet your needs. You can borrow a small amount for a fixed period, which you can not do if you borrow from first class banks. Increasing your authorized overdraft may seem like a quick fix, but the problem is that we rarely reduce that amount once we have covered emergency expenses.
This means that we are constantly subject to our overdraft limit and incur associated fees every month. With a payday loan, you know it’s a short-term solution that will be erased at your next payday.
Many payday lenders have more availability than other lenders. This means that if your emergency happens outside normal working hours, you are likely to always get the funds you need. Most payday lenders have an automated online system, which means you do not even have to wait in the phone queues to arrange your loan.
It’s great if you have an unexpected car breakdown at 8 pm, for example. Older borrowing styles would have meant waiting until 9 am the next day for help, having a ripple effect on going to work, taking the kids to school, and more .
With the convenience of payday loan, you can sort the funds in the evening of the outage in the comfort of your own home, knowing that you will be able to get everything settled in the morning.
Finally, many payday lenders can still lend you money if you have a bad credit score. This is because the loan is issued based on your income and your ability to repay. Even if your credit score is poor, you may still be eligible for help through payday loans; help that you might not qualify through other lenders such as the street banks. Payday loans give you greater reach even if you have had credit problems in the past.
When should I take out a payday loan?
Payday loans are short term loans that are designed to be repaid during your next payday. Many borrowers take these loans when unexpected bills arrive and they do not have access to funds to make the payment. The good thing about payday loans is that they are usually available immediately and in general you will not have to complete any documents to receive the funds. However, it is important to seriously consider taking out a payday loan or any other type of credit, by the way. These are a few things to consider when deciding to take a payday loan.
Do you really need it?
The first important point to consider is whether you need the loan. What is the reason for requiring additional funds? If it’s just to buy something new or to go on vacation, then you’d better do without it, rather than getting into more debt. However, if it’s a necessity, like paying your rent or buying food, then it’s definitely worth considering if you do not have other options.
Can you repay it?
It may seem like you have plenty of time to pay off your loan, but we all know how fast time can pass. If you’re thinking of getting a payday loan, take a look at your budget first. Can you afford to pay it back at the end of the month? If you can, would you have money for food / rent, etc.? You should only take any credit if you can reasonably afford to pay it back. If not, it is important to look at other options. Friends and family may be willing to help and will probably be less strict about repayment.
In order to qualify for a payday loan, you should have a bank account and be employed. In some cases, you may need to have a credit check to get your loan. However, this is less strict than it would be with other financial institutions. You may also need to prove your employment status, so be prepared to have documents ready to be sent to the lender.
What are the advantages?
We hear a lot about payday loans in the press compared to other forms of credit and their severity, but payday loans are no worse than diving into an overdraft. If you repay your loan within the specified period of approximately 30 days, you do not incur any additional costs. The good thing about payday loans is also that you can get the loan in a few hours or days. If you are in urgent need of money, these can be a lifeline for many. Unexpected emergencies can happen to anyone and most of us are not prepared for these incidents, even if you usually have a lot of money available.
What is the next step?
If you decide to go ahead with a payday loan, you complete the application that will ask general questions about your background and employment status. You will decide how much to withdraw and for how long and this will be accepted or rejected. You may be offered less than what you requested, but this may increase in the future, if you decide to take out another loan and have repaid it in time.
How to save yourself from future problems
If you need a payday loan – it’s not the end of the world, but you should use it as a clear sign that you need to take care of your finances. Borrowers take payday loans as a last resort and usually because they do not have other funds available, so you need to improve your budget if that’s the case. A budget is the best and most convenient way to incur any type of credit in the future, including payday loans. If you efficiently manage your budget and reduce unnecessary expenses, you will be able to save more money and face unforeseen bills or expenses.