A Guide to Payday Advance Loans
Payday advances loans are becoming increasingly popular throughout the United Kingdom, as people look for a short term solution for solving their financial problems, before then being debt free again when the next payday comes around. Of all the loan types though, this type is probably the least understood by the general public, so what are some of the important things that you should know about them?
How Quick are Payday Advance Loans?
These types of loans are usually extremely fast, as they don’t deal with huge amounts of money and also they don’t need a long contract in order to guarantee regular payments over a set amount of time. Most companies offering this type of loan will allow you to fill out a form online and, should you be accepted, you will receive your money within 24 hours. This money will be deposited straight into your bank account, so allow for normal clearing times should your bank impose them on their customers.
How Much can I Borrow?
Typically these types of loans are for small amounts, as the whole loan needs to be paid back in one sum within one month. As it is based on the amount of money that you will receive from an employer on the next payday, the amount that you will be allowed to borrow will differ from person to person, however the average amount is somewhere around the £500 mark. This is because you will be able to afford to pay this back, while also having enough money to live on for the rest of the month.
How Much Interest is Charged?
As you might expect, the amount of interest charged on these types of loans is very high, but as they are only taken out for one month, the interest should not be unmanageable. Most lenders charge between 25%-30% of the loan in interest, therefore meaning that those borrowing £500 would end up paying about £625 back at the end of the month. For some this might seem like a lot, but often those who desperately need money will be fine paying this.
Is my Bad Credit Rating a Problem?
One of the main advantages to a loan of this type is that your credit rating really isn’t taken into account – instead, the lender is more worried about whether you are in full time employment, as this dictates whether they will get their money back or not. In fact, most lenders don’t even carry out a credit check on applicants, as this holds up the process and makes no difference should you have a job. Therefore, those with bad credit often find that a payday advance loan is the best option for them in their current circumstances.
How Do I Find the Best Company?
As with every other type of loan, you should really do some research before deciding on whom to borrow from. This is because finding a company with the best interest rates is imperative – it could end up costing a lot less when it comes to paying the money back if you do your research. If you don’t want to do all of the investigations yourself, consider using a site that will compare all of the lenders for you, therefore instantly giving you the best deal.