Thursday, September 20, 2012, AM | 16 Comments
Payday loans have become a very popular way of borrowing relatively small sums of money at short notice. They are often used to bridge a gap before payday and are quick and easy to organise.
Why Payday Loans?
Payday loans are a relatively new product onto the lending market and they are designed to be different from credit cards and regular loans which are for large sums and designed to be repaid over a long period of time.
A payday loan is a short-term bridging loan, to tide you over and provide emergency cash before you get paid paid. You can borrow up to £1000 once you have used the service successfully in the past and up to £400 on the first occasion.
People take out payday loans for a variety of reasons, because of an unexpected bill, a car maintenance charge, to pay for a holiday or to take advantage of a sale bargain, the list of reasons is endless.
The main features of payday loans, however, are that they are only designed to last until the applicant is paid. At this point, the loan repayment is due, with interest applied at the pre-agreed rate.
Who Can Get A Payday Loan?
To get a payday loan, you need to be aged 18 or over, be resident in the UK and have a direct debit card that is attached to a valid current account. You will also need to have access to a registered mobile phone or a computer to request your loan.
You must be in receipt of a regular income, whether that is from employment, a pension or from benefits and you must be prepared to repay the loan and the interest at the pre-determined rate, on the loan repayment date.
If you don’t, there will be fees and charges to pay and these can mount up quickly if you don’t stick to the terms and conditions of the lending arrangement.
For this reason, it is important to fully understand the terms of the loan and read the small print carefully. Also, only apply for a payday loan if you are confident that you will be able to repay it.
How To Organise A Payday Loan
To apply for a payday loan today, text the lender’s advertised text number with the message format and personal pin number that they will have provided you with at registration.
You will also be able to request your loan via the website, by entering your personal details. When the lender has received your request, they will be able to transfer the money into your bank account in just a few minutes.
You will be able to take out the cash in just a couple of hours with the faster payments scheme administered by most banks. At that point, the cash is yours to use as you wish and the repayment will be taken from your nominated debit card automatically on the repayment date, which is usually 7-14 days after you take the loan.
In conclusion, these products can be useful as a bridging gap when finances are tight, as long as they are managed carefully and repaid on time. When this happens, payday loans can also be used to help rebuild a damaged credit record.
Tom Dyer writes regularly on a variety of finance and consumer topics for a range of consumer websites and publications. Tom believes that payday loans are useful features, provided they are managed carefully, so if you apply for a payday loan today, do read the small print carefully.