What are Payday Loans ?
The purpose of a payday loan is fast, easy money to take care of life’s little emergencies. Payday loans are short-term, high-interest loans designed for people who need a quick injection of money before their next payday. Payday loans are intended for a short time frame of two weeks or so, for a modest amount of money usually between £50 and £500. A payday loan is a cash advance secured by a personal cheque or paid by electronic transfer. You obtain one of these loans from a payday lender.
In order to obtain a payday loan, you will in most cases be asked by the lender for a cheque for the amount you would like to borrow with an additional fee, charged for borrowing. The company will give the borrower the amount they wish to borrow, less the fee, and agrees to hold the cheque until the loan is due to be repaid; usually the borrower’s next payday. The lender will cash in the cheque when the loan is due. Alternatively, with the borrowers permission, the lender deposits the amount electronically. Therefore the loan amount is due to be debited the next payday. In the circumstance that you cannot repay your payday loan, the loan becomes extended and the fee accumulates.
The cost of a payday loans is often somewhat ambiguous, largely due to misunderstood interest rates advertised in the media. In general, the fees on payday loans are a percentage of the amount borrowed, although, they can be based on increments of money borrowed, for example the fee may increase over every £50 increment. The borrower is charged an additional fee each time the same loan is extended or “rolled over”. By law, lenders must provide in writing the fixed charge on the loan you have taken out but also the APR. This is also the case for when payday loan companies advertise their services to the public, they must disclose the annual percentage rate (APR) in the small print. The APR is based on a number of factors, including the interest rate and credit costs on the amount that you have borrowed and over what time period. This can be misleading to viewers that don’t understand the concept of APR and make the loans look extremely unappealing and far more expensive than they actually are.
So how expensive actually is a payday loan? Well this all depends on the percentage or fixed fee rates of your lender. Lets say you want to borrow £100 from your lender who wants to charge you 10% of your borrowed amount as a fee. This means you would have to write a cheque for £110 made payable to the lender. When your loan is due for repayment, the lender will cash the cheque and you redeem it by paying the £110. However, if you cannot afford to repay your loan, you will be charged another 10% of your original loan to extend the time period by usually 14 days. This means that you will now be charged a fee of £20 in order to borrow £100. If you repay your payday loan on time, you should have no problems, but if you continue to miss repayments, expensive fees can accumulate.
The main advantage of a payday loan is that it is very simple to acquire one very quickly, unlike many bank loans. As long as you have a bank account and some form of income, almost anyone can have one. Additionally, payday loans can be taken out extremely quickly because of the low qualifying requirements, closely related to their purpose of being very short-term loans. Payday loans can enable people to manage when they have expenses that are due to be paid before their next payday. The alternative to borrowing from a payday loan company may be missing the payment of a bill, which could incur additional charges, being deprived of essentials or getting disconnected from utilities like electricity. It is therefore a very valuable form of credit for people who may not have savings or have access to other forms of credit.
Payday loans are an increasingly easy way to get a cash advance, and with some of the best online lenders the process is now incredibly fast. When lenders will not approve payday loans until they see certain documents, this can add a lot of time onto the application process. In such situations you normally have to fax documents through and wait until someone checks it and responds. The extra time this takes is at best an inconvenience and at worst can cause long delays that are a major problem when you need money fast.
When you have the need for cash fast, instant payday loans may be the best option for you since many times you can gain approval without faxing any documents and have the money in your bank account within one business day. Payday loans are a short term lending solution that will help you meet financial obligations in times of extreme need.
Meeting Short Term Obligations
Payday loans may have received an unfairly bad reputation from some people, since there are many lenders and borrowers who misuse them. However, when you need a small amount of cash for a short period with little hassle, there is no better option. They can provide you with the finances you need without the hassle of faxing documents to a lender or waiting for approval. That is why many people also call them instant loans.
If you think that using this kind of loan could be the right choice for you, then there are a few important facts that you need to know first. I will describe them below.
How Payday Loans Work
People who are unfamiliar with the phrase payday loan and instant loan may at first be confused about the utility of this lending option. However, they are simple, short-term; low-principle loans that allow people the ability to cover bills without worry or too much paperwork.
Whereas traditional loans take time to gain approval and require an abundance of paperwork such as paystubs and tax documents, these loans require no such information. Instead, payday loans are given out based on simple employment and bank account verification.
How ‘Instant’ Are Payday Loans ?
Considering the ease of the application process, getting a payday loan is a lot faster than many people think. The term ‘instant’ isn’t too far from the truth, in fact. Once you provide the lender with your basic information – name, address, employer, and bank account – they will begin the process of electronically verifying your data. This usually takes only a few minutes before you are given approval.
Once approval is granted, you will have the total amount of your loan deposited into your designated bank account within one short business day. This gives you almost instant access to the funds you need.
After learning of the benefits and ease of acquiring a payday loan, the last question is how much money one can receive. Like I mentioned before, payday loans are for small amounts, that range is usually between £100 and £1,500. The reason for such small loans is the short terms that come with them. Generally, these loans are given for 14-60 days, so taking any more money would be nearly impossible to payback in that period. As you continue to repay your loans responsibly and build up a good reputation with your lender, however, sometimes you can get that amount increased.
The best part is their convenience. They are easy to get because they do not require faxing documents and can be deposited directly into your bank account quickly. Once you begin to appreciate the utility of responsible use of instant payday loans you won’t be able to remember how you lived without them. You can get exactly when you need for this. You do not need to be present to the lender. You get the cash, once your documents get checked by concerned authority. In some cases it does not take more than 24 hours.
Take the full advantage of this pay day loan. You can easily get rid of difficult situations. Get money in your emergence need. Be safe and out fear with this instant loan facility.