While payday loans are popular as emergency loans among borrowers with low credit rating, there are many others who reserve courage to use the same. A lot of misinformation is spread all over the internet and many deserving borrowers lack the know how to make best use of the available resources.
Here is a quick cheat sheet for those who want to use payday loans for their cash lapses.
What are payday loans?
A payday loan is a short-term loan worth £500 or less for a fixed deadline on your next payday. These loans are extended instantly without any credit check or guarantor and thus come with additional rate of interest. At present FCA which is the financial watch dog in the UK has put a cap of £30 interest rate on loan of £100 for a month.
Is there any limit on how much I can borrow?
Although there is no cap on borrowing limit of payday loans but it is recommended to use these expensive loans for small amounts only. Precisely because, the loan needs to be repaid as a single lump sum amount and with bad credit it can become extremely challenging to pay back the principle with interest amount.
How does lender reimburse the amount?
To ensure the timely repayments, a lender would ask you to sign a post-dated cheque in advance. According to the loan agreement they would process the cheque to debit funds on the date of your pay check.
Is there any eligibility criterion for payday loans?
The only requirement to payday loan is a fixed income stream for the amount you seek to borrow. The lender would not assess your capacity to repay loans or your past credit history before approving your loan.
Can I rollover my payday loans?
Being expensive loans it is not advisable to roll over your payday loans. As rolling over the loan can attract late payment charges. However it is technically feasible to roll over your payday loans. You must enquire about the same before using the loan.
Are short term loans better than payday loans?
Before you use a loan you must compare the deals. However you cannot compare apples and oranges. Likewise it wouldn’t be wise to compare payday loans with short term loans on the basis of APR%. The major purpose that payday loan fulfills is making the funds available to you on time. As these are raised for small duration such as 10 to 20 days to gap fill the cash lapses, it would not be right to compare the annual interest rate to compare this loan.
Why are payday loans popular despite high cost?
If you contact a regulated loan broker you would come to know about the popularity of payday loans online. The sole reason for popularity of payday loans is it helps borrowers avail instant access to funds for their immediate needs. There is no credit check and no hassles involved to get approved for these loans. Thus people with poor credit eligibility opt for payday loans as instant cash gap loans.
Hope this information serves your queries on payday cash advance. In case you have further questions you should feel free to contact a regulated loan broker.