Payday loans are type of loans, usually between $100 and $2,000, that you can borrow for between 16 days and one year. This type of loan is usually handy when you need to pay for an unanticipated expense that cannot wait until your next payday. These can include emergency home repair, medical expenses, car repairs or even a holiday.
How do payday loans work?
Payday loans do not require borrowers to deposit any collateral or provide guarantors. Additionally, as the name suggests, you do not need to provide your credit report to qualify for this credit facility. All you have to do is provide proof of income, a permanent address and a bank account. The lender is, however, allowed to call your employer to verify your employment details. They may not contact anyone else about your loan. Since most credit lenders offer this facility online, you can comfortably apply for your loan from the comfort of your living room.
The pros and cons of payday loans
Like with any other credit facility, Payday loans do come with their pros and cons. For starters, it is important to understand that payday loans are not suitable for everyone. As such, it is advisable that you only consider this type of credit if you know you can repay the loan and interest on time.
Here are some of the benefits of payday loans
- Instant cash upon loan approval
Once your loan application has been approved, the cash is often transferred to your bank account instantly thus you can immediately withdraw it as soon as it is cleared by your bank. Most banks have speedy payment service which enables payday lenders to offer fast funds transfer service to their customers.
- Online application
Perhaps the greatest benefit of a payday loan is that you can apply for Payday loans online from the comfort of your home, any time of day. You do not have to call anyone or visit ‘a local office near me’. You will be given an instant feedback as soon as you submit your loan application form.
- Higher loan amounts
Once you have built up a track record with your payday lender, you will be eligible for higher loan amounts. Thus, by paying back your loans on time, you will always have the peace of mind that should you need an emergency loan in the future they will be always be available for you.
Aspects of short term loans you need to know
- High interest rate
The one noticeable drawback to taking short term loans as opposed to the conventional loans or overdrafts is their high interest rates.
- Extra fees may apply
Failure to repay your payday loan on time may attract several charges and penalties. You should therefore consider short term loans if you are 100% certain that you will repay your loan plus interest as agreed with the lender.
Payday loans application process
1. Find a legitimate payday loans direct lender
- There are always several payday direct lenders out there. However, not all are legit. Thus, your quest for Payday loans direct lender should begin with finding a legitimate direct lender that will not scam you out of your money. Once you have identified a legitimate lender, be sure to do the following:
- Visit the lender’s website to take a look at their terms of service. Pay attention to the fine print as you look out for any hidden fees that the lender may try to conceal from you.
- Look at their interest rates. Are they reasonable to you?
- Find out the kind of penalty you will be charged if you fail to pay your loan back on time
- Find out if you can apply for Payday loans online. If you can only access part of the application, you may consider moving on to another direct lender.
2. Only deal with direct lenders that have reviews, and ratings of the services they offer
It is important that you find out what other borrowers say about a payday lender. This is where reviews and ratings come in. If you cannot find the lender’s review anywhere, either move on to a different lender, or refers to area agencies like state consumer affairs to get information on the lender. You can also get credible reviews and ratings from the Better Business Bureau (BBB).
Be sure to verify the authenticity of these credit lenders before getting into business with them
3. Set your limits
This is crucial because getting the right payday loan amount and setting up a comfortable repayment plan is vital to making sure that the facility will work for you. Most companies will offer up to $2,000, but that does not mean you should apply for that much. Only apply for the exact amount you will need to settle the emergency, and immediately draw up a plan that will allow you to pay back your loan and interest in time.
3. Get the relevant supplies ready
When you sit down to apply for Payday loans no brokers, it will be helpful to have everything you need within reach. While lenders differ regarding the kind of information they will ask you to provide, you will be expected to provide both financial and personal information. What’s to be included:
- Your bank account information
- Your social security number
- Proof that you are an adult (18 years of age)
- Your contact information, including your physical address and phone number
- Proof of income, like your payslip
- Employer contact information
4. Double check the interest that will apply
Ensure that the fees do not change throughout the application process. Think through the interest rates and decide if you are comfortable paying the quoted interest on your loan. The Truth in Lending Act requires Payday loan providers to be completely transparent about their interest rates and fees.
5. Fill your application providing the necessary information
As already mentioned, different credit lenders require different kinds of information from prospective borrowers. At the very basis, you will most likely be required to provide the following:
- Name and date of birth
- Contact information
- Bank account details
- Employment and employer details
6. Wait for your loan to be approved
Once you have duly submitted your loan application, it will have to be processed by the lender. The approval period usually varies from company to company, but most companies will report the result of your application within 72 hours maximum. The lender will mail to tell you whether your loan have been approved or not.
Most companies will report the results of your application within 24-72 hours maximum
Most lenders will take a look at your credit history before getting into business with you. However, others do not. These are referred to as payday loans.
Payday loans are short term loans that come with significantly high interest rates. However, be sure to verify the authenticity of these lenders before getting into business with them.
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