Tag Archives: pay day

What to look out for when getting a payday loan

Taking out a payday loan can seem a foreign concept to many of us, however, at some point in life, almost everyone has experienced a financial downturn at one time or another. Unfortunately there are situations when quick money is needed, whether to pay off unexpected bills or when financial demands simply come out of the blue!

It’s in situations like these that payday loans can prove to be a useful solution. A payday loan is essentially a short term loan that last for around a month and is useful for people looking for quick cash to bridge the gap until payday.

In recent years payday loans have become more and more popular as payday lenders never credit score and very rarely ask to see documentation. Once approved the loan can be in your bank within 24 hours.

When shopping around for a payday loan there are a number of points you should look at carefully:

1. The total amount the payday lender is willing to give you. Details on this must be included in the agreement.

2. Payday loan charges. Lenders can include a range of charges, fees and interest rates over the lending period. Always shop around to ensure you’re getting the best deal for you.

3. The APR (or Annual Percentage Rate). This can prove an excellent way of comparing payday loans, however, it’s worth bearing in mind that an APR is a measurement of a yearly loan. Payday loans are monthly and therefore an APR isn’t always the most accurate measuring tool.

4. Available repayment options. Repayment is traditionally set for payday – typically a month after you’ve taken out the loan. However, should it prove difficult to repay the loan you can defer repayments and pay-off in instalments.

Payday loans prove a better alternative to overdraft fees

More and more banks have a tendency to encourage their customers to overdraw their current accounts, allowing the banks to skilfully avoid credit laws and collect millions in overdraft fees.

Curiously enough it has recently been suggested that payday loans could present a more economical form of credit than paying out for expensive overdraft fees.

Typically most forms of credit charge a typical annual percentage rate (APR) or around 16%, however, overdraft fees charge fixed fees for any transaction that goes over the limit. Overdraft fines can be anything between £15 – £35 per transaction, translating to a potentially very high APR.

In comparison you only pay back around £15 – £20 for every £100 borrowed from a payday loan company. As long as your payday loan straight-away repayment costs can be kept to a minimum and prevents you from going into the red with your bank. This not only prevents potential overdraft fees but can also stop any cheques from bouncing, and spiralling into excessive debt.

Following a case brought against the banks by the Office of Fair Trading (OFT), many banks are starting to realise that charging their customer’s excessive amounts for going overdrawn is unethical and needs to be regulated in the same way as credit cards and other forms of lending such as unsecured loans and payday loans.

Bridging the gap until payday

If it’s proving to be a tough month financially there are a number of solutions you can look into to help you out. Being faced with unexpected bills and other unforseen expenses can be daunting for anyone living on a tight budget, especially if you’re low on credit.

There are of course short-term borrowing solutions available to you, including credit cards and bank overdrafts. Unfortunately not everyone has this luxury available to them. If this is the case payday loans may just be the solution you’re looking for.

A same-day payday loan usually lasts up to 31 days and are essentially cash advances on your expected salary at the end or the begining of the month.

Payday loans generally range between £100 – £1,000 and can be used for a variety of reasons, other than simply bridging the gap until your next pay cheque, as long as you can pay them back once your expected salary arrives. In many instances you can spread the repayments (usually called deferrals) should you struggle to pay them off.

Paying off a payday loan in one go can prove to be a far cheaper alternative than paying off an accumulating credit card debt and is certainly worth considering if you have the ability to pay it off in one go.

The interest rates on payday loans can look unusually high is because they are measured on the same APR scale as year long loans. However, payday loans only last a month so, in reality, you will only end up paying around £15 – £25 interest on top of whatever you borrow.

Are payday loans really that bad?

A lot of bad press has been written about payday loans in the last few years, and much of it is unwarranted in many respects.

Not everyone has a good credit rating and many of us simply can’t get the credit or loans we need. Payday loans could fill that gap – they give you access to an almost immediate source of finance. In some instances you can apply for a payday loan and receive the funds in a few hours.

The main criticism that payday loans come up against is that they are too expensive, however, they could prove to be a far cheaper option than many forms of loans or credit cards.

Payday loans have received a lot of bad press recently due to the fact that they are measured by the same APR (Annual Percentage Rate) system as if they were a longer term personal loan.

However, it’s worth bearing in mind that payday loans are NOT a long-term loan and are purely designed to run for around a standard month, after which you simply pay the loan, and the interest accrued over a month, back. Paying off a payday loan quickly can prove a far cheaper option than letting a credit card debt accumulate.

Ten Top Tips When Getting A Guarantor Loan

Top ten tips for getting a guarantor loan

Top ten tips for getting a guarantor loan

If you’re considering taking out a guarantor loan take a read of our ten top tips beforehand – always make sure you understand what you’re signing up to before applying.

1. Ensure that you have someone who is ready and willing to act as a
guarantor for your loan before you apply.

2. Always make sure that your guarantor is a reliable candidate and they would be in a position to pay back the loan should the unthinkable happen and you’re unable to pay it back yourself.

3. Check that your guarantor has a good credit score with no recent history of bad debts or CCJs (county court judgements).

4. It’s vital that your guarantor understands the risk involved when acting as a guarantor for your loan. They have to fully appreciate that, should you be in a position where you can’t pay the loan back, they will be asked to re-pay the amount in full.

5. A guarantor loan is essentially an unsecured loan that is based on the guarantor’s credit score, not the applicant. As a result guarantors with a good credit score should be able to obtain the borrower a low rate of interest, potentially making the re-payments lower than with other forms of lending.

6. Make sure that you, the borrower, has the funds to pay the guarantor loan back once the lending period expires. Never rush into obtaining a loan if you feel that you may find yourself struggling.

7. Some loan brokers may demand an upfront fee for looking for a loan for you. If you find this to be the case then avoid applying through them at all costs – remember a fee is NOT A GUARANTEE that you will get a loan. Only pay a fee to a loan broker after you have the loan confirmed and you have taken it out.

8. Always give your correct contact details. Whilst this may sound silly it’s surprising how many people give out false details. Without accurate information you will be unable to obtain a loan and this could potentially leave you out of pocket – especially if you pay for a service you never receive!

9. Failure to repay a guarantor loan will impact your personal credit score so it is in your best interests to ensure that you are able to re-pay this as it will open up other ways of borrowing in future.

10. Guarantor loans are NOT quick, short term solutions and therefore they may take a little longer to process (it can take around a week to receive the loan). If you’re looking for a short term loan then you may want to consider a payday loan or credit card as an alternative.

Finally we strongly encourage you to thoroughly read through any loan agreement/contract before signing anything (digitally or otherwise).

Get a Guarantor Loan >>

Image: renjith krishnan / FreeDigitalPhotos.net

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Leading financial lender suggests Brits need to save more

Could payday loans and guarantor loans be the answer to many Brits who have little credit available to them? Recent research by Skipton Building Society suggests that, on average, a typical consumer scores around 4 out of 10 on the financial happiness scale.

The study also showed that the national level of savings most people would feel happy with would be around £194 per month. Unsurprisingly, the city of London came out as the main area where UK consumers needed to save the most amount of money to be happy, in fact as much as £60 more than anywhere else in the UK.

Kris Brewster, head of products at Skipton Building Society, commented:

“Financial worries can affect all of us, but it’s important to take control of your finances and do the most you can do to ensure your finances are in the best state you can achieve.”

In recent research by BBC Radio Three, around 50% of people believe that being given more money would be the major factor in increasing personal happiness.

Should you be stuck with impending bills at the end of the month and need a little more money to tide you over until the end of the money you could consider a payday loan or a guarantor loan.