Payday Loans

Does a Payday Loan Suit Everyone?

It can sometimes be difficult to know whether certain loan types are suitable for certain people or not. Obviously, some loans have specific uses such as a realtor loan but some are more general and can be used for multiple things. This means that if you need a general loan, then you have a lot of choice. You will need to think about what criteria you need in a loan and then match up the one that suits you the best. This means that not all loans will suit everyone and therefore a payday loan will not suit all needs. There are some factors that might be of interest though, when you are choosing whether to use one or not.

How much you can borrow

It is important to understand that a payday loan will lend only small amounts of money. Normally they will be used to lend a few hundred pounds or perhaps a bit more, normally only up to a thousand. This might be significantly less than you can expect from other lenders and means that you will need to think about whether this will be the right amount for you. There are many advantages in not borrowing too much. You will not have to repay for so long and you will not have the loan for so long. It can reduce the stress and burden of borrowing to know that you do not owe that much and that it will be repaid soon. It is worth knowing though, that if you are a first-time borrower of a payday loan, then you may find that you will not be able to borrow that much. The lenders tend to only lend smaller amounts to first time borrowers to reduce their risk. Once you have proven that you can repay a loan on time, then they are likely to lend you more. This will vary between lenders though and so you will need to compare them and see whether there is one that will work for you. It may be that you will need to contact the lenders directly in order to find out.

How repayment works

Repayment works differently on a payday loan to most other loans. You will repay the whole amount that you borrowed plus the interest and any charges in one lump sum. This means that you will be able to clear the whole debt in one go. The repayment will happen on the day that you are paid, by a direct debit that will be set up to make sure that you will have enough money to repay the loan, when it is needed. You will have your salary available to cover the cost of the loan and therefore there is better chance that you will be able to afford it. You will still face fees if you cannot repay the loan, but as long as you borrow a sensible amount, that you know you can afford to repay and are careful with spending; then it should be fine for you. 

How borrowers are selected

With most loans you will have to have a credit check and you may even have to show details of your salary to secure a loan. A payday loan does no credit check and so you have no worries about whether you be accepted even if you have a low credit score. You will also not need to show any salary information, although you will have to show that you do get a regular income so that the repayment date can be set up on the day that you are paid.

So, you can see that it is easy to borrow with a payday loan as the selection criteria are very small. This means that loans can suit anyone, regardless of their credit record. The repayment happens quickly, which means that it is great, even for those that do not mind being in debt, it can be great to know that your debt will not last long. The amount that you can borrow will be relatively small compared to other loans. This is great because it means that you will not be able to borrow more than you can afford to repay. However, if you need a large amount of money, you will need to choose an alternative type of loan. You will also have to be confident, that if you borrow a lot of money with the payday loan that you will be able to afford it all in one go. It might be that you would prefer to repay it instalments to make it easier to manage. They may be some payday loans where this can be done, but you will have to hunt for these or you may prefer to choose a different type of loan. It is a very personal decision as to whether a payday loan will suit you. You will need to think about what you are looking or in a loan and then you will be able to see whether the payday loan will fulfil your criteria.

Payday Loans

What are the Advantages of Payday Loans over Other Loans?

There are many types of loans available and so if you want to borrow a few extra dollars it can be hard knowing which to choose. You may know lots about loans and lending or very little, and either way it can still be hard to choose because there are so many options available. One option that people tend to know less about is the payday loan. These are newer than many other types of loan and tend to be offered by lenders outside of the mainstream ones. Therefore, many people do not know a lot about them. This means that it can be worth understanding what makes them better than other loans so that you can decide whether they will be a useful option for you.

  • No credit check – payday lenders do no credit check. This is because they were set up to help those with a poor credit record as it was noticed that they did not have many borrowing options. Therefore, they set up a loan where no credit check was done which meant that it was available for everyone. This means that you do not have to worry about whether your credit score is good enough to get a loan. You will be able to get one regardless and therefore you will be able to not worry about whether you credit score will be good enough. It can be possible that you will be turned down for a loan if your credit score is not good enough and this will not look good on your credit report and could reduce your score even more. This means that if you choose a payday loan, where you will not be turned down, you will not have a negative impact on your credit score when you apply.
  • Quick to arrange – A payday loan is quick to arrange which means that it can be suitable when you need money in an emergency. Some lenders will be able to arrange for you to have the money within a few hours and most would get it to you within a few days. This means that if you need money quickly, then they could be really useful. Many other types of loans will take significantly longer to organise and you may just not have the time available to wait that long for the money.
  • Short term – payday loans only last for a few weeks. This means that you do not have the loan hanging around for very long. This can be an advantage for those that do not like the idea of being in debt for very long. There are some people that will worry about owing money and worry about managing the repayments every month. These people could be a lot happier if they know that they will be able to pay off the loan very quickly and therefore clear the debt within a few weeks.
  • Lend small amounts of money – payday loans are only available for amounts less that £1,000. This means that you will normally only borrow a few hundred pounds. This can mean that the loan is much more manageable than when you borrow larger amounts. Often, you have to borrow larger amounts for loans. It can then be tempting to spend that money and you can then find that you will spend the money and then find it really hard to repay it. Therefore, if you can just borrow a small amount then you will find it easier to repay and you will not be in debt for so long.
  • Easy to Arrange – sometimes it can be the application process that puts people off when they are looking for a loan. There can sometimes be a lot of paperwork to fill out and you might even need to go to the branch of a bank and speak to someone about the loan. This can be daunting and take a long time. With a payday loan you may be able to apply online or over the telephone. The information you provide is minimalist so the application process should not be daunting or tedious. The lenders realise that you might need the money fast and so make sure that it is quick to apply so that you can do so quickly.

Therefore, you can see that there are many differences between payday loans and other types of loan. This means that it is good to consider the when you are deciding which loan you want. It may be that a payday loan will suit your needs better than any other type of loan. It is good to think about what you need from a loan and then you will be able to think about whether a payday loan matches your needs better than other types of loan.