Payday loans are unsecured, short-term loans. They are meant to accommodate a borrower for a brief time of financial difficulty. They are easy to obtain and utilise if you know what you are doing. The interest rates associated with payday loans is higher than the more commonly known traditional loan types. However, well-known lenders, like Cashfloat, offer multiple benefits that offset the high-interest rate. Such as;
- Instant availability of funds
- Lack of too many formalities and documentation
- Approval of loan application despite bad credit score
- Rigid following of regulations and more!
Payday loans have become especially popular in the UK due to the COVID-19 pandemic. These loans provide people with a convenient way to resolve their urgent expenses. They are handy for those who have lost their jobs or their employers have put them under furlough.
Before taking a payday loan, there are a number of vital things you should be privy to. Read the following brief guide and make your decision after acquiring pertinent information.
Let’s jump right in.
What is Payday Loan and How Does it Work?
Payday loans work for people who are desperately in need of quick cash. This is a high-interest and short-term loan. Some people consider a payday loan as an expensive alternative to other lending options. Still, the fact remains that it is a very convenient way to get instant cash. The funds are directly paid into your bank account upon approval.
The time granted for repayment is generally two weeks or until your next payday. Some lenders may extend the deadline to three months in certain circumstances. It is crucial to do research and proper planning before getting a payday loan. Otherwise, you may struggle with paying back.
What Makes a Payday Loan Special?
Payday loans are very popular in the United Kingdom. The main reason behind such popularity is the instant availability of funds. Other loans may take weeks or months for approval. Payday loans rarely take more than a day in getting you what you want.
Online availability of payday loans is especially vital in the lockdown caused by the COVID-19 outbreak. All transactions are done online, making it easy to resolve urgent expenses.
Lastly, the lenders may also offer a reprieve in the repayment plan because of the slow economic conditions.
What to do if You Can’t Repay the Payday Loan?
You can get assistance if you can’t repay your loan due to the COVID-19 outbreak. You may request a pause or reduction in your mandatory repayment instalments. Additionally, you may be able to stop the repossession of anything bought on finance.
If you find yourself in a situation where you cannot repay the loan, please contact the Credit Union. They may be able to help you by;
- Working out a manageable repayment plan
- Temporarily stopping the additional interest accumulation on your loan for a specific time period
- Delaying your payments for a certain time
What to Consider Before Taking a Payday Loan?
It would be best if you keep several things in mind when taking a payday loan. It would help to get a better deal.
- Search extensively to find the best deal.
- Compare the offers and choose what offer suits you the most.
- Ask the lender for the features, benefits and other characteristics of the loan deal.
- Find out what are the rules for late repayment.