Why Payday Loans Are Sweeter Than Christmas Morning?
What is a payday loan?
Payday loan, also known as salary loan, payday advance, cash advance loan, payroll loan or small dollar loan, is an unsecured loan for a short period. The loan amount is borrowed on a check that is post-dated check and is cashed on the upcoming payday of the borrower.
What are the eligibility criteria for payday loans?
A payday advance loan relies on the following on behalf of the borrower:
- Minimum age criteria (18 years in most states)
- An open and active checking account
- Steady proof of income
- A valid contact number
Payday loans in the United Kingdom
Presently, payday loan is one of the fastest growing industries in UK. The number of people availing these loans has quadrupled in the last decade. As per, the reports of the Financial Conduct Authority (FCA) in UK, almost 200 out of the 50,000 odd credit firms are payday lenders.
FCA keeps a check on the payday lenders on two grounds:
- Guarantee that firms only provide loans to those who can afford it.
- Increase awareness regarding the costs and risks of these loans and provide means to help the borrowers during financial difficulties.
FCA has also proposed the following limits to ensure good lending business:
- A cap of 0.8% per day on the initial cost.
- A cap of £15 on the fixed default fees.
- A cap of 100% on the total cost.
One of the quick and best means to generate cash during a financial crisis is to apply for a payday loan. It helps you to cope up during an unexpected financial emergency without having to wait for the month-end salary. Some of the important benefits of thisloan are listed below:
- The loan application process is simple and quick. Loan approvals are immediate, sometimes as soon as 15 minutes but no longer than 72 working hours.
- You can apply for a payday loans anytime. You do not have to wait for the next morning or the next business hour for applying a loan as most of these loan institutions are open 24x7. This allows them to process the borrower's request for a loan as soon as they apply for one.
- You can apply for the loan from anywhere. There is no need to physically visit the financial institution for the application process.
- The loan application process is very convenient as everything is carried out online. Hence, no need of going through the usual tedious formalities while availing a loan from a bank.
- You can receive feedback regarding your eligibility for the applied loan almost immediately.
- Unlike the conventional loans issued from banks that are for specific purposes, say a housing loan or a car loan, you can spend your payday loan on anything such as a hospital emergency, paying your house rent or even spending it on your vacation, with no questions asked.
- If you are a good borrower, say you clear your previous payday loan on time; the firm can then increase the limit on your next loan amount based on its lending policy and your paying capacity, i.e. your salary.
- Applying for this loan does not require your credit report. In cases where your credit is damaged or if you do not have a good credit rating yet, your chances for payday loan eligibility will not be affected.
- Moreover, since the overall period of these loans are short, it will help you to protect your credit rating. Whereas with other traditional loans, where the period of repayment may extend beyond a year or more, there are chances that you might lose your job or face a financial crunch, hence making you a defaulter.
- Most of all, utilising a payday loan than borrowing money from family or friends lets you become independent and helps you to manage money matters better.
Hence, availing a payday loan is an easy and quick way of handling financial emergencies, and as long as you repay your loan in your next salary cycle, you are allowed to borrow money, be it for any purpose. However, if you fail to do so, then you will be forced to pay huge penalties and may even face lawsuits. Hence, all is well as long as you are a good borrower. So if you are ready to avail your payday loan, then apply now.