A payday loan offers borrowers the option to get access to extra funds when they would otherwise have been turned down by traditional lenders. It is a common option among borrowers with bad credit scores as most lenders are likely to reject them due to how they are often seen as less creditworthy by most lenders.
How Payday Loans Work
These types of loans are marketed for people who are having a hard time financially, at least until their next payday. It is short-term which means that it will need to be paid off the moment the borrower gets his next paycheque.
To make it even more accessible to borrowers, most payday lenders have made the application process easier and faster. All that the lenders require is for a borrower to be 18 years old, a UK resident, have an active bank account, and must have a source of income. Lenders offering this borrowing option are generally not concerned of the borrower’s credit score. What they are more concerned with is if the borrower will have the means to pay off the amount come the due date.
Another factor that has made these lenders popular among the public is the fast payout. Since the application process is simple and streamlined, and done online, lenders can come with a decision within a day. Funds can also be released to the borrowers within the same day or on the next business day. There are even lenders that can get the funds out in just a matter of hours.
Emergency financial needs can be frustrating especially when you have no access to extra funds. If you have no savings to fall back to, one viable option for such a short-term cash need is to get a payday loan. A short-term loan, this can be a great alternative for your emergency borrowing needs.
These loans are usually for a small amount that you are then expected to pay on your next payday. You'll be expected to loan costs and interests on the due date too. They are traditionally paid in cash. In addition, they are known for having high interest rates. It has risen on popularity in recent years thanks to the fact that it is one of quickest ways that people can get access to funds which can be paid out by lenders on the very same day.
What to Use Payday Loans For
In the UK, people apply for payday loans for a variety of reasons. There are no restrictions on where and how they should be used, such as paying any emergency bill or even paying off other debts. While these loans used to be offered for a smaller figure in the past, these days, lenders can offer bigger sums payable over a longer period.
They are mainly designed to help those who are in sudden need of extra funds where other forms of credit may not be accessible. Due to the nature in which these loans are often availed of, most of the lenders offering them have streamlined their application process, thus allowing even some of them to get the funds paid out within hours from approval.
Can I apply for payday loans online?
It is possible for borrowers to process a payday loan application online. However, just like any type of loan offered in the UK, applications are going to be subject to affordability and credit checks. This is to ensure that the borrower can indeed afford the loan.
After these checks have been performed, direct lenders will also have to consider the borrower’s credit score before they decide. These, lenders that offer their services to bad credit borrowers now consider a number of criteria, instead of just focusing on their credit scores alone. A borrower also needs to be at least 18, a resident in the UK, has an active bank account, and should have some form of monthly income.
Short-term loans are becoming more accessible to people in the UK. While there are people that may be put-off by the high interest attached to payday loans, they do provide a great alternative to people who need to get access to funds fast. But they should not be looked at as a financial solution for the long-term and should only be considered in the direst of needs and as a last resort.