UK payday loans – the most important info that you should know
This is an article in which we will be looking at only the most basic pieces of information on payday loans in the UK. WE like to call this out little introduction to payday loans and we are certain that many people will find it useful. Even those who have got some knowledge of payday loans and the practice of these loans in the UK might find out new stuff that will shed some new light on certain things that might have been unclear for them. Still, it is mainly meant to provide the basic information to those people who know either nothing at all or very little about these loans which are on their way of becoming one of the most popular financial practices in the United Kingdom.
If you thought that payday loans are significantly different from some other types of loans that you have been able to get in the UK for decades, then you are wrong. Once again, they involve someone who is lending the money, someone who is borrowing it, the money that changes hand and that is later repaid with interests. As you can see for yourself, it is pretty much the same thing as with other forms of loans that you might know more about. That being said, there are far more differences that set these loans apart and that make them so unique.
For instance, getting a payday loan is much easier than getting any other loan in existence today. If you have tried applying for some kind of a loan, then you have probably encountered and battled with the approval process that can take weeks, months even. The bank or whoever it is that you were trying to borrow money from dug through your entire credit history and determined whether you are eligible for a loan. In addition to this, you probably had to inform them of how you intend to spend the money that you borrowed and how you intend to pay it back.
When we are talking about payday loans, we are talking about an approval process that lasts half an hour, a day at the most. The only thing that the lenders check is whether you have a steady source of income and whether you will get another paycheck the following month. After that, it is smooth sailing. They do not care about your credit rating and they do not care about how you wish to spend your money. As long as you can return the loan, they will give it to you.
It should be pointed out that payday loans are limited both in time and in the amount of money that is made available to you. For instance, the upper limits on payday loans are usually somewhere between £600 and £1,000. It is possible that a lender, with whom you have had a long and successful history, will allow you to take out more, although this is not certain. When we talked about a time limit, we were thinking about the fact that the payday loans are usually meant to be paid the next time you get your paycheck or any other form of regular income. In fact, payday loans often require you to postdate a check or to provide information on your account that the lender will use to get their money back when your account gets enlarged for the amount of your next paycheck.
The last thing that we would like to talk about and quite possibly the most important one are the interest rates. We have all heard horror stories about the interest rates on payday loans and the fact is that they are not far from the truth. In fact, if you were to take out a payday loan of £1,000 and wait for a year before you return it, you might end up owing the lender more than double the amount. When you add the fees and the rollovers to this amount, you are getting some outrageous sums. Luckily, as the loan is repaid very quickly, the interest rates are much more manageable. Still substantial, but manageable.
You can deduce for yourself that payday loans are something that can be very useful in some situations but also something that can be quite dangerous in situations in which you are not careful. However, if you pay some attention and do everything right, you should have absolutely no negative experiences with payday loans.