While in many cases, borrowing a payday loan is a great option, it may not be advisable to lean on that option every month. Moreover, you must find a reputable lender and follow the legal process of borrowing. Therefore, read on to find out all the important details concerning the payday loans.
Payday Loans Defined
The first question that comes in mind is what are payday loans? Payday loans are a type of short-term loan, which the borrower must return on their next payday. Borrowers usually go for this option when they need to meet their various financial needs at the end of the month. These loans are preferred since they are funded immediately and you can have access to the money in a matter of minutes via online money transfer.
Things to Consider If you are Opting for Payday Loans
While payday loans may sound like an easy option to solve your entire financial crisis, they come with a price in the form of higher interest rate. Therefore, it is essential for you to consider a few things before opting for payday loans. These are as follows:
1. Rolling Over
In many cases, people going for a payday loan are working with a tight budget. Therefore, they are often tempted to roll over the loan. However, this is a dangerous thing to do since payday loans come with a high interest rate and in case of rolling over, the interest and other fees will grow as well. As a result, you might end up with a huge amount of debt and paying it may become difficult for you. Therefore, avoid the roll over option as much as possible.
2. Borrowing the Minimum Only
It is advisable that you only borrow the minimum amount, which you are in absolute need of. Borrowing more will only lead to greater debts, difficulty in paying the amount back, increased interest, and an addition to your bad credit. Therefore, make an accurate estimate of your essential financial needs and borrow accordingly to avoid suffering from the negative effects of payday loans.
Finding a Reputable Lender
Now that you have estimated the amount of money you need to borrow and know whether you will be able to return it on your payday or not, the next thing to take care of is finding a suitable and a reliable lender.
Even though payday loans are a great option if you are in need of fast cash in an emergency, they are unsecured loans with higher interest rates. Moreover, every payday loan lender offers different terms concerning the interest rate and the set time to return the money. Therefore, it is essential for the borrowers to look for a reputable lender offering the best package.
Following are a few important things you must look for in a payday loan lender:
- They are offering lowest or similar interest rates as compared to the other lenders.
- How much time are they willing to offer you for the return of the loan?
- They have a good previous lending record with successful transactions and low rate of roll over.
- A reliable authority such as Financial Conduct Authority (FCA) regulates them.
- They do not have any previous record of harassing the borrowers.
How to Get the Most Affordable Payday Loans Deal
In case of any emergency such as when your house is in urgent need of repairs or if there are bills that must be paid, going for payday loans sounds like a sensible idea. However, you must make sure that you find the best and most reliable deal for your payday loan. One great way to make sure that you are getting the best deal is to compare payday loans in order to find the most affordable deal.
Laws about Payday Lending in the UK
According to the laws concerning payday lending in the UK, the lenders should ensure that the other party is in fact capable of returning the money within the given time frame before lending. This requires them to run a check on your credit history. Technically speaking, you should not be getting the cash right away even though if it does not take a lot of time to check a person’s credit history. Moreover, it is essential for the lenders to be able to properly assist the borrowers about every step of the payday lending and its consequences on their finances. In short, the borrowers must be fully aware of the risks involved in case they fail to repay along with the interest rate at which they are offering the loan.
A good lender should first and foremost, act as a financial counsellor to help you deal with your financial issues, instead of convincing you to go for a payday loan regardless of whether you need it or not. This is what makes a payday loan lender reliable and reputable.
How to Compare Payday Lending Options
When trying to find the best deal by comparing various payday lending options, do not simply go for the cheapest deal. Instead, also investigate other factors including reliability, the period they are offering and most importantly, if FCA regulates them or not. If you are looking for a reliable payday loan lender, then find the best by comparing the various options available on the UK’s top comparison sites like Quiddi Compare