Management of financial affairs does not always turn out to be a smooth experience. There are times when unexpected expenses arise. Your car may break down and the charges for repairing the vehicle would come about as an emergency expense. It may not have a big impact but there is a possibility that you may have to pay your income tax this month and it is likely to hit the management of the living costs. You may be requiring five hundred British Pounds as a result of the breaking down of your car. So, where do you turn to?
You could opt for bank overdrafts but unplanned overdrafts would cost you more than a payday loan in terms of interest charged on a daily basis. Approaching payday lenders would be the easiest way you can manage those five hundred British Pounds. Once your loan gets approved in a matter of hours, you will have that much needed amount deposited in your bank account latest by the next day. It is that easy! It may cost you a little heavy on the interest component but you earn yourself much convenience. Such convenience has made the payday loans extremely popular in the United Kingdom and it has translated to an industry worth thirty billion British Pounds, serving several hundreds of locations within the country. The number of payday lenders in the United Kingdom has risen sharply in the last decade.
Payday loans have been designed for those people who are in urgent need for quick cash before their next pay day. The main intention of payday loans is to offer easy and swift money to take care of little emergencies that come about without a warning. Payday loans could be best described as short-term loans that charge a high rate of interest. The amounts loaned out are generally between 50 and 1500 GBP. These amounts could be obtained from payday lenders and the process of applying for such loans is a simple one.
Borrowers may either visit the payday loan companies or apply online There are many payday lenders who run their entire business online. The loan application is a simple one, unlike the ones used by the banking institutions. This application will include contact information of the borrowers, their banking details and their active employment information. In some cases, payday lenders would ask for references or guarantors in case of default on repayment of the loan amount.
The borrowers have to pledge to repay the loan amount by a fixed date and this is usually the next month’s payday. The lenders will charge interest and finance charges, as applicable over and above the loan amount to arrive at the final repayment amount.
Once the loan amount is approved, the lenders will arrange to deposit it in the bank account of a borrower. The lenders will also arrange a direct debit instruction with the borrower’s bank on the stipulated date of repayment.
In case the borrower is unable to repay the loan amount on the agreed date, there is a `rollover’ situation. The Financial Conduct Authority has given that buffer to the borrower whereby the payday lenders have to agree to roll the loan amount over to another term which could be either a fortnight or a month.
Borrowers who have a poor credit history need not be worried as payday lenders would very rarely check on the credit status of a borrower as long as he or she is actively employed and has a regular source of income. The pay cheque works as the biggest collateral for the payday lenders.
Payday loans have become attractive in the United Kingdom because of the open-mindedness of the payday lenders in terms of credit checks for poor credit borrowers, rollover possibility in case of default in repayment, maintenance of privacy of the borrower’s personal information and expediency of the entire loan process.