Payday Loans

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Payday Loans are not always bad, often they are exactly what you need. What is a 3 Month Payday Loan?

As the name would suggest, a 3 month payday loan is a loan that you will repay over three months. This provides a greater degree of flexibility for paying it back and by spreading out your payments over a longer period of time; you get the chance to pay less every month. It should be noted that a 3 month payday loan is different from a standard single instalment payday loan. That loan needs to be paid back within normally the month and in one lump sum. The fact that this loan can be paid back across a number of paydays in a 3 month period will provide people with a greater degree of flexibility.

We offer an instalment based loan system, that is more flexible because we allow you to pay your loan back over a 3, 5 or 6 month period.

Please remember however that the longer the loan term the more you will repay overall.

What is a "traditional" payday loan?

A traditional payday loan is a loan where a person borrows a small amount of money and the sum of money is paid back, with interest, on the day a person gets paid. The usual amount of money involved with a payday loan can range between £100 and £1,000 and there is a need to pay the loan off in a lump sum payment within a set time. The standard rate of time is usually 14 days, 21 days or 28 days. Nowadays payday loans can also be repaid on an instalment basis too.

What is a payday advance?

A payday advance is just another way of saying payday loan. In an attempt to differentiate themselves from rival firms or in an attempt to avoid some of the bad publicity that surrounds some payday loan firms, a number of companies are promoting themselves as firms that offer a payday advance to their clients. There is no real difference to the sums of money you receive or indeed, the way that you pay off these loans.

Payday loans are for emergencies

It should be noted that payday loans are best used when there is an emergency. If you need to get money in a hurry, it makes sense to choose the loan that provides you with cash directly into your bank account in a relatively short period of time. In this regard, payday loans are commonly used to pay for washing machine repairs, to get your car fixed or even boiler repairs. Payday loans can be arranged quickly, which means that you have the money when you need it.

However, given that payday loans can be obtained in a fast and easy manner, there are some people that take out payday loans for situations which are not emergencies. This is irresponsible and extremely expensive, so it should not be an option you consider. There are great benefits from payday loans but only if they are used correctly.

The current economic situation is difficult for many people but it is important you do what you can to have cash saved in the event of an emergency. With some experts claiming that people should have around 3 to 6 months’ worth of living expenses stored away for safe keeping, there is a lot of pressure on people to take better care of their finances. You should strive to have these funds available if needed but with the current economic situation being what it is, it is easy to see why many people are unable to do so.

Also, when an emergency arises, the very nature of the emergency means that it can wipe you out financially. This is where people need external support to make sure that their life continues to run smoothly.

Where can I get a payday loan?

While there are an increasing number of firms on the high street who will provide you with a payday loan, you will find that there are more payday loan firms to choose from on the internet. It is important to weigh up your options before you commit to a certain lender and it is important that you find the right style of payday loan. There are a number of payday loans to choose from and some of these are stated below:

Payday loans UK. This is a particular style of payday loan that is only available to people who are based in the United Kingdom. People need to be living and working in England, Scotland, Northern Ireland or Wales during the period of the loan and the money will be placed into a person’s bank account.

Online payday loans. This is a way of applying for a payday loan online with all of the forms being concluded online. This is a convenient way for many people to apply for a loan because as long as you can access the internet, you have the chance of applying for such a loan. While payday loan shops will require a person to fill out forms and then hand money over in person, this system allows money to be paid directly into their bank account. For some people, this is a safer option.

Faxless Payday loans. As the name suggests, this is a loan that can be arranged without faxing of documents. The original payday loans would be often require the borrower to fax a set of documentation to the lender, nowadays many of these checks are done electronically. In some cases, even the faxless payday loans will require some documentation to be sent if the information cannot be validated electronically.

Payday Lenders Only. Anyone that is keen to work with a payday lender directly, and not via a broker or intermediary site, will find that this is the best style of loan. There is a lot to be said for dealing with a firm directly, it makes sense to deal with the firm you want to deal with.

Payday Loans Today. If you need to have the money in your bank account on the day of application, there are some companies you can rely on. After you have applied and the application has been approved, the money will be transferred to your bank account on the same day.

What criteria do payday lenders look for?

It is known that a large number of payday loan firms will use credit checks to assess their applicants. There will also be decisions based on employment status, age and if a person has any other loans outstanding. It is not possible to cheat or game the system as there are so many different elements that go into the final decision.

We take payday loans very seriously and we have a number of criteria that our customers have to meet, which include:

  • Being a UK resident
  • Being in current employment
  • Earning a minimum of £750 per month
  • Being at least 20 years old

 

How payday loans online have changed over the years

When online lending was first introduced the product on offer was very different to what is currently being offered by lenders in the modern day market place. In fact many consumers who previously understood the offerings of the market will probably be surprised to learn just how much things have changed. Payday loans online have been available now for nearly a decade and as a result it is not surprising to expect some changes to have taken place. In the past the requirements of the product by consumers was very different and it is only as time has passed has it become clear that the old form of borrowing is far too restrictive for many.

I think it would be realistic to note that the modern day consumer is used to having to pay for goods and service over a period of time and many now accept that purchasing these things ‘outright’ has become, for many, a thing of the past. Credit cards are a great example of this and the needs of consumers. Much like payday loans online, they have been a stable resource available to consumers for many years and if used and managed correctly, can provide assistance when needed. The key here and with any type of lending of course it ensuring correct usage. Many consumers are able to do this very successfully but for those where this is not the case, these type of loans like any others may not be the solution. Therefore for any consumers who find they are unable to realistically manage their monthly commitments and the expenditure they bring, it may be worth considering help from an external resource. A great example of this is the charity based organisation known as Step Change. They provide free advice on how to better manage existing debts and in doing so attempt to reduce the pressures of monthly finances.

For consumers whose normal monthly budget is capable of supporting their usual level of expenditure, payday loans online, like other credit facilities can provide a much needed resource. These loans are really designed to be used over a short period of time and this is reflected in the amounts being offered by lenders. Typically these loans are for £100.00 up to £500.00 and consumers should borrow with the ability to repay the amount they request. An example of this is if a consumer needs to borrow £200.00 for an emergency car repair or dental bill, then it would be recommended that only £200.00 be borrowed and not a greater amount. The reason why this is so key is that like all credit it is important to borrow within your realistic means and not outside of them which can lead to more complications down the line. Lenders who now exist in the market also take the matter of affordability very seriously too. Many lenders ensure that applicants complete full details relating to their budget as part of the basic application process. Lenders can then use this information alongside information relating to the credit reference file to establish if payday loans online are suitable. 

The product now being offered as mentioned above, is far different for the old style of lending. In the past lenders offered consumers a very simple product which comprised of a one-off repayment to settle the loan. This meant on the agreed repayment date, usually no longer than a month away, the customer would agree to repay the loan and the interest applicable back in a lump sum repayment. For those customers who could not gather the amount needed to repay the lump sum lenders offered a repayment known as an extension. An extension worked on the understanding that the customer repay the interest currently due on the account on the agreed repayment date. In most cases the interest of these loans was worked out based the amount borrowed and not the specific period of time. This meant paying £30.00 interest for each £100.00 which was borrowed. An example to illustrate this then was a £400.00 loan would carry an extension fee of £120.00.

Clearly extensions did not serve to assist the customer in real terms and instead meant more and more interest was repaid. Payday loans online are now very different and operate on the understanding that customers need flexibility and choice when borrowing online. Many lenders now offer instalment loans which can be repaid over an agreed period of time and for an agreed amount, also the interest is often charged on a daily basis.

What are instant payday loans

For many consumers the need to borrow a little extra money will occur at some point or another. This means that consumers must be aware of the resources which are available to them. The current market for borrowing is vast and can range from classic bank based borrowing right through to online short term lenders.The current market for online borrowing is designed specifically to support these borrowing needs. The majority of consumers will be aware of instant payday loans and what they offer but in fact the market as a whole has undergone a number of changes in the last few years which means nowadays the product selection is much better. The modern instant payday loans are often flexible and offer the consumer a range of repayment terms. Today let’s explore what borrowing in this market today would mean and the options which are being presented to customers.

Back at the start of the market for borrowing a small amount of money the product offered to customers was very straight forward. This product was known as a classic payday loan. These type of loans allowed customers to borrow for a period up to 31 days and asked that the agreed repayment date be nominated as the applicants next employment pay date. The amount the customer could borrow would vary but typically loans were offered between £50.00 and right up to £1000.00 in the case of some lenders. If approved the customer would receive the money the same day which when combined with the online and compact application form, meant these loans as a whole became quickly popular. The interest payable was often reflective of the amount borrowed and not the period the agreement was active. This was because the longest periods were no greater than 31 days and therefore the interest focused on the amount borrowed. Typically the customer would repay £30.00 interest for each £100.00 which was borrowed, meaning a £500.00 would cost £650.00 on the agreed repayment date. Obviously this type of lending demanded that the customer make a large financial commitment from their forthcoming pay and therefore expected a certain level of planning and budgeting which for some proved unrealistic. Many customers using this type of loan instead choose the option to ‘extend’. An extension meant the customer could repay simply the interest due on the loan instead of the contractual repayment. Of course making these extension payments did not reduce the amount which was owed and instead served to ensure customers repaid more interest over a longer period of time.

Nowadays the loans being offered are very different and allow the customer to commit to a longer repayment term at the point of applying for the loan. This therefore takes away the need to extend and continue to repay interest which was not planned for. Instant payday loans now are based on instalment style repayments where having completed an online application form a customer can usually select to repay over 3, 6, 9 or even 12 months if they prefer. These loans therefore allow the customer to understand the total amount repayable in advance; should they select a longer repayment term. 

Payday loans and how to ensure you can afford them

For many years now consumers have been using a range of borrowing facilities to help support their everyday lives. Whether this be a large bank loan for a long term financial commitment or a small loan used to address an immediate financial shortfall, the modern day consumer is aware of the different types of credit which are available. That said it is also fair to highlight the fact that many consumers can sometimes find the budgeting of borrowing difficult when combined with the other costs associated with everyday life. This in part is one of the reasons why payday loans became so popular so quickly. When this type of borrowing was introduced it sat alongside more traditional borrowing resources such as credit cards. The difference being that payday loans gave consumers the opportunity to apply for a small amount of money in a quick and easy fashion. Before this type of lending, consumers would need to communicate with their bank or a similar resource in order to attempt to obtain credit. The discreet nature of the online application process used to apply for a payday loan meant consumers could attempt to manage their finances on their own. Of course this type of borrowing brought new sets of problems as well as support; being the original intention of such lending. In actual fact for a number of consumers this type of borrowing, particularly in the earlier days, served to add strain to already difficult budgeting requirements.

In order to ensure when considering these loans if they are the correct choice a consumer must be able to first understand their own budgeting needs. A budget sets out all expenses that must be repaid on a monthly basis and compares the total figure to the amount received as income. This means that a budget must include all commitments that occur on a regular basis, such as rent, water, travel and food. Obviously there may also be commitments relating to existing loans and borrowing. For those consumers whose budgets highlight that in fact they are unable to meet their existing expenses, any form of additional borrowing will almost certainly have a negative effect. In such instances it may be useful to seek the advice of a third party representative for the assistant in managing existing debts. There are free charity based organisations who offer such services, such as StepChange, who can offer guidance without additional costs being incurred.

For those consumers whose budgets are manageable, payday loans may be able to serve a purpose but it is important the reason for borrowing is correct. This means ensuring borrowing is used for the right reasons. Payday loans were designed to assist consumers who face an unexpected and immediate expense, such as the car breaking or an unplanned vet bill. These are the type of bills which could not have been planned for in advance. In such cases it is reasonable to expect that the consumer will need to generate some additional funds. Wherever possible it would be sensible for the consumer to consider using savings or borrowing the money from a family member or friend, as it will not typically mean repaying interest. Of course for many this is not possible and it is therefore understandable that payday loans may be considered.

The best type of loan will depend again on the customer’s budget and the amount of spare income the individual has available at the end of the mount. It is important with any new borrowing that the commitment proposed does not require the customer to commit the entirety of their spare income to its repayment. This is why in more recent year’s instalment based payday loans have become more and more popular. Instalment loans allow the customer to repay the amount borrowed over an agreed number of months and this means the actual amount repayable can work with, not against, existing financial commitments. In fact many lenders offering payday loans nowadays can offer repayment terms which extend from 3 month right though to 12 months in a number of cases. This means the customer can make an informed choice at the point of submitting the application and therefore has the ability to consider their current budgeting requirements. When considering any form of short term borrowing it is always worth repaying the loan over the shortest and most affordable period of time. This is because the longer the term the greater the total amount of interest repayable will amount to.   

By Kieran Moulden