Payday Loans

Warning: Late repayment can cause you serious money problems

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Payday loans are a very expensive type of unsecured loans. These are lent for a short term. Payday loan lenders who provide you with money have to be repaid when you receive your next salary or on your next pay day. These types of borrowings are made in situations when people face a sudden crisis like accident or an unexpectedly large utlity bill especially when they do not have other financial options like savings or credit card.

Payday loans are not the same as bank loans where you borrow money for a longer period of time and that has to be repaid in instalments. 1 Month Payday loans should be repaid as a one-time lump sum along with the interest amount. These can be obtained online and it is usually a very simple process. A few things that one must bear in mind are that it is not suitable for borrowing over long periods. Also, it is not a suitable type of borrowing if one is constantly facing financial troubles.

Applying for a payday loan is very simple procedure. You just have to fill an application form where you must provide your identification details and financial data. Once you submit your application the lender will, either electronically and/or manually review the application and if approved and the money is transferred to your account. It is the easy availability of these payday loans that draws in so many people who are in an urgent need of money.

Some peoples will often search for the term 'Payday Loans No Crdeit Check' when they know that they have a poor credit history. Under current regulations, there are very few lenders who will not do any form of credit checking at all. What many lenders will do is view your credit file in a different way to the main high street banks. For example a bank may use a pre defined credit score which, when it sees any defaults on your account will instantly penalise you for it. A payday lender on the other hand may off set a 'old' default with a recent good history, especially if these are on payday loans.

The few lenders, who provide the payday loans no credit check facility, may consider your application by looking at other criteria to decide whether you can afford to repay the amount on time. This may include you having to provde many many months of bank statements and other documention to support your application. However as I already said the number of lenders doing no credit checking at all is very tiny. This system has its own as while it will show repayments coming out of your bank, it will not show those payments you didn't make, or whether the amount was enogh or ontime. 

The interest rates for these payday loans are very high. For example, if you borrow an amount of £100 pounds, it could aquire an interest of up to £24 pounds per 30 days. If you have a credit card that you can use for the purchase or bill then this could be significantly cheaper.

As payday loans are very costly, borrowers must use them with great caution.  If you fail to repay the whole amount on time, you can be charged a fee and additional interest. So once you get stuck in a payday loan cycle, it may lead to much bigger financial problems for you. 

Looking at the downside of it, it is not advisable to extend or renew a payday loan unless it is the only option. In case it is not possible for you to repay in full, you must contact your lender as soon as possible and inform them about this. You can ask them to arrange an extension or it may be better to explain your situation and ask them for a repayment plan. 

When you repay your loan, the lenders who conduct credit checks will report it to the Credit Reference Agency who will record the information of your loan being repaid. If you have not repaid your loan, this will be recorded too and will have a negative impact on your credit rating. This greatly affects your future ability of accessing any other form of credit.