As payday loans are relatively new, there are still a lot of us that do not know very much about them. This means that we can get confused when we are thinking about them. It is a good idea to know a bit about them and then if you need a loan, you know enough in order to decide whether it will be the right loan for you. One thing you may wonder is whether it is easy to get a payday loan.
Many loans will require a credit check before the lender decides whether to lend to you and what interest rate they will charge. They will look at your credit rating and think about how risky they think you are as a potential borrower. This will help them to think about whether they think you will be able to repay the loan. If you have had loans before and paid them back then this will go in your favour and if you make regular payments such as for rent, mobile phone contracts or utility bills this will also go in your favour. If you have never borrowed or do not have your name on a bill, do not have a regular income or have had trouble repaying loans, then this will all go against you and might put lenders off.
However, a payday loan requires no credit check. The loans were established to provide lending for those that had a poor credit record and therefore were unable to borrow anywhere else. This means that even if you have a poor credit record then you will be able to get a loan. There are just a few criteria that you will need to match – you will need to be over 18, a UK resident, you will need to have an income and a bank account.
Sometimes the application process for short term loans can be complex and can take a long time. There are often all sorts of forms to fill in and it can take a long time and need all sorts of information. This can be off putting and it can take up valuable time when you may need to get the money very quickly. With a payday loan they try to make the application process as simple as possible. They will need documents to prove who you are and where you live such as bank statements and utility bills, but as long as you have things like this to hand, it should not take too much effort to apply.
A payday loan is arranged quickly. Some of them can be arranged in just a few hours and they can often be done outside of normal banking hours. This means that if you need the money really quickly then you will not have to wait long to get it. This can be extremely useful if you have a very limited time to pay for something. However, you do need to be careful. It may be that you apply, get the money and spend it before there is time to really think about what you are doing. Make sure that you are aware of the cost of the loan, when you have to repay it and how much you have to pay and whether you can afford it. By finding out how much the loan costs, you will be able to decide whether you think that it offers you good value for money. You may feel that it is just too expensive or you may look at the figures and realise that you will just not be able to afford to repay it.
Is it too easy?
So you could even argue that the loan is a bit too easy to get. Some people have criticised them because they are available to everyone, even those who are very vulnerable financially. It is therefore really important to make sure that if you are borrowing money through a payday loan, that you take some time to think about whether it is the best thing for you to do. Consider whether you really need the loan, whether it is worth the cost of it to buy whatever it is that you need and whether you will be able to pay it back and manage afterwards. It may even be wise to discuss the idea with someone else and think about what they say about it as they could have some advice or see it for a point of view that you have not considered. It is a big decision, as all borrowing is and therefore you should make sure that you take time to consider it fully and understand the consequences of taking the loan as well as not taking the loan. It may take longer, when you think about all these things, but it will be worth it.