The UK payday loan market is worth almost £2 billion at present and this figure looks set to rise. The fact that the loans are so easily accessible at a time where employment is falling and expenses are rising fuels their popularity.
Market research into cash till payday loans have identified that up to 60 per cent of payday borrowers use the money to pay for household essentials. This is things like rent, mortgages, food, utility bills and childcare costs.
With banks and building societies more reluctant than ever to lend post-Lehman brothers collapse, consumers have no other choice than to turn to payday lenders.
Thankfully, the process of applying for a payday loan via a lender is much simpler and quicker than via a bank or building society. If you are considering this type of borrowing method, you need to ensure you have the following things to hand before you start your application:
Are you over 18 years of age?
You must have proof of your age and that you are over 18
Are you in employment?
You must have proof that you have a regular income / salary going into your bank account to ensure you can meet your future repayment obligations.
Do you have a bank account with a valid debit card?
You will need to prove you have a UK current bank account with a valid debit card in order to receive payment and make repayments.
Do you have access to an email account?
If you don’t, its really easy to obtain a free yahoo, Hotmail or google-mail email account
Do you have a landline, mobile and work telephone number?
Guaranteed payday loans are the fastest growing lending type in the UK at present. The reason for this is two-fold; they are quick and easy to apply for and with most lenders, you get an instant decision and also the economic climate currently means that more and more people need access to loans just to survive.
Applying for a cash till payday loan is simple. All you need is to be a UK resident, over the age of 18 and have a UK back account. Some lenders also require you to have a minimum income of £750 per month.
The next thing you need to do is to source a payday lender. If you want an instant decision, there are two things that you need to check before choosing a lender:
· The lender guarantees an instant decision
· The rate of APR is competitive
There are so many payday lenders in the market that most will offer these criteria. Regarding an instant decision, even the most thorough of lenders will offer a decision within an hour, others will give a decision within ten minutes and some even quicker.
It is important to establish a lender with the lowest rates of APR as if, for any reason, you need to extend the loan period, you will incur the least costs. The most competitive rates on the market for a payday loan are usually £25 per £100 borrowed as long as the loan is repaid within the 30 day timescale.
Cash till payday loans are the fastest growing lending type on the market. They exploded in the UK in 2006 and are meant as a short term borrowing solution i.e. less than a month. They are easy to apply for and obtain and if you repay within the agreed timescale, you will avoid the high rates of APR. They can also be used to improve your credit score.
Cash till payday loans are usually accessed for an emergency because of the nature of the loan. However many people have realised the fact that accessing and repaying a payday loan in accordance with its terms and conditions actually leaves a positive credit footprint on your credit file. Thus it improves your credit rating.
How credit ratings work
Having a good credit rating is important as this means that lenders of products and services will work with you and offer you more preferential rates. For example a good credit rating incurs a better mortgage rate.
Having a poor credit rating limits the products and services that you can access e.g. credit cards etc. Poor credit ratings can be incurred by missing payments, overspending and having too much credit.
How your credit rating can be improved
To improve your credit rating you firstly need to access your credit report from one of three UK vendors, Experian, Callcredit and Equifax. Once you have done this, rectify any anomalies on the report and if your score is still poor, access a payday loan.
Accessing a payday loan
Accessing a payday loan is simple. Choose one that suits you from the many on the market and apply online or in store. You should have a response within an hour and the deposit in your account within 24 hours.
You can then repay the loan plus the fixed fee (usually £25 per £100 borrowed) anytime you wish before the 30 day period.
Once you have completed your transaction, a positive footprint will be left on your credit report to show that you managed your debt within the terms and conditions of the loan. This means that your overall credit score will improve.
Note that this process will only be effective if you make a full repayment on time. If there is any danger that you will not be able to follow this process, do not start it as you will just end up with more debt.
Ever since cash till payday loans exploded onto the market six years ago, there has been so much negative media hype around them. The main reason for this is the rates of APR which are incurred if the terms of the loan are not met. However this is down to the individual managing the loan, not the loan itself.
Therefore we have put together a fact-sheet about cash till payday loans to clarify the hype and show how they can be used to your advantage:
·A cash till payday loan is a short-term borrowing facility, usually for no more than 30 days. They are designed to ‘bridge the gap’ to make ends meet before payday.
·Applicants must be 18 years of age or older, have a valid UK bank account that can accept direct debit payments, be employed, receiving a regular salary and be a resident of the United Kingdom.
·A cash till payday loan should not be used for everyday borrowing. It should be for emergencies only e.g. they are cheaper than using an unauthorised overdraft.
·APRs (annual percentage rates) can vary from 1737% to over 4000%. However the ‘APR’ refers to the cost over a full year whereas they are only intended to be used for up to 30 days. Also many companies offer a fixed rate if repaid within the agreed timescale, at a much lower return of £25 for every £100 borrowed.
·Most lenders tend to not run a credit check. Therefore if you have a poor credit rating, including defaults or even CCJs you can still be approved for a short term loan.
·People with poor credit history who access a payday loan can actually improve their credit rating. This is achieved only by adhering to the repayment terms and conditions which will leave a positive footprint on your credit history.
·Payday lenders generally lend between £80 and £1,000.
·Some providers arrange to withdraw the money straight from your current account once your payday arrives, while others require you to repay the money by debit card or cheque.
·Most lenders will aim to transfer the money into your account on the same day or by the next working day.
·It is possible to postpone repayment or ‘rollover’ the loan. However this is not advisable as this is when the loan becomes extremely expensive at the APR kicks in.
·If you do decide to ‘rollover’ the loan, many providers will ask you to repay the interest at least, while others will charge an additional fee for delaying repayment. You will then also pay an additional months-worth of interest.
·Sourcing a cash till payday loan is like sourcing any other type of financial product. There are a range of lenders and you should compare the market to find the right payday loan for you.
·For your own benefit you should not have more than one payday loan at a time. However, because most providers do not run a credit check, it is possible have multiple payday loans.
As the UK struggles to recover from the double-dip recession, the government are trying to extract money in every possible way be it increasing interest rates, fuel costs, pay freezes, pension freezes, and redundancies. Therefore it’s little wonder that requests for a payday loan are at an all-time high as the average household is finding it harder and harder to make ends meet.
The UK banking system is largely responsible for the global recession due to their over-lending. Consequently, the same institutions are now being incredibly cautious about lending people money. This means that it is more difficult than ever to get credit or loans. This is driving the demand for payday loans, as the application process is easier.
Typically, it is the credit report which determines whether or not a person is accepted for a loan request, therefore having a bad credit report can mean being refused credit or a loan.
Credit reports are official reports documented by three agencies (Experian, Equifax and Callcredit) which effectively creates a consumer profile of how you manage your finances. It records every time a payment is missed or a CCJ is incurred etc. These reports are what every single lender will look at when deciding whether or not to award a loan or credit.
The great thing about cash till payday loans is that they do not discriminate against people who have bad credit. This is because most payday lenders do not even run credit checks therefore they are still prepared to lend a sum of money despite any financial history.
Therefore borrowing money in the short term means that cash till payday loans are a great solution, providing that the terms and conditions of repayment are adhered to. If not, the loan recipient will incur more debt.
Cash till payday loans are a great source of income for people who have bad credit because the majority of payday lenders do not run credit checks. Cash till payday loans are a great short term financial solution for anyone with bad credit, needing to resolve an immediate problem.
Payday loans have revolutionised the short term finance market ever since they exploded in the UK back in 2006. Payday loan TV adverts continue to occupy prime time TV slots thanks to their popularity translating into revenue for their companies. Therefore most of the population have a good idea of what payday loans are, or what the companies behind them say they are! We have put together a list of five facts about payday loans so that if you have any doubt about what they are and what they are intended for, hopefully this will iron them out.
Payday loans are not free
Payday loans are provided by a financial lender at a cost. The cost is the rate of interest or APR which at its most competitive is 1737%. This means that for every £200 borrowed, you must repay £50 within the agreed timescale of 30 days. This essentially means that the loan costs £50. Every single payday loans company will charge you an amount of money to take out the loan.
Payday loans must be repaid in full
The full cost of payday loans must be repaid in full once you agree to take out the loan. The lender is not sensitive to personal situations be it redundancy or pay cuts etc, therefore they will expect you to make the agreed repayments by the agreed dates. If you do not adhere to this, they will try and contact you to discuss the situation. If you still do not cooperate, they may pass your case onto a debt collector.
Payday loans are not always the cheapest option available
Payday loans fall into the bracket of short term financial solutions. There are other sources of short term borrowing which are overdrafts (secured and unsecured) and credit cards. It is imperative that you research how much you need to borrow and identify the cheapest possible way of borrowing that amount of money.
The longer you take to repay the loan the more money it will cost you
Payday loans are only meant to be a loan until your next ‘payday.’ This is a period of time between 14 and 30 days. If you choose to defer the repayment, you will incur a cost usually equal to another month’s interest. Therefore if you have borrowed £200 and defer the payment for a month, you will be charged an additional £50, therefore you will owe a total of £300.
In the US there are two payday loan companies for every Starbucks
Let’s round off with a fun fact! In the US (which is where payday loans originated from), payday loans are still extremely popular, so much so that there are 11,000 Starbucks locations versus 23,000 payday loans locations! This demonstrates exactly how popular this industry has become.
How many times have you wished that you could access a pot of money to help you out of an emergency situation? Whether this is emergency dental work, car repairs, household repairs or utility bills, it does not matter, the important thing is that the option to resolve the problem is often non-negotiable. You simply cannot ignore a leaking radiator, or tolerate cold water showers etc. therefore the introduction of the payday loan absolutely answers your wishes.
Cash till payday loans are loans which are accessed via a private third party company who allocate the loan against the premise of your next pay cheque. There are very few criteria if you compare this to a more traditional personal loan or credit card product. The only personal information that you need to provide is your personal details (name, address etc.), proof that you are over the age of 18 and proof that you are currently in some kind of employment, as long as you earn over £750 per month.
The application process itself perfectly complements the emergency situation of the loan. You can apply for the loan either online or by going into a payday loan retail outlet on the high street. This is because it takes approximately five minutes to complete the application form and once submitted, depending on which company you have applied through, you should have a decision within an hour. Some companies even promise to have the cash deposit in your bank account within an hour. Therefore if you break down in your car, miles away from home, you can have the cash amount in your bank account by the time it comes to settling the bill for the repairs to your broken down vehicle.
The other great advantage of this type of loan is that most payday loan companies do not take into consideration your credit history. Therefore if you have been penalised in the past for missing payments, CCJs or even bankruptcy, do not worry because a payday loan will still be an option available to you. The only thing that you need to be mindful of is that you make your repayments on time and in full as you will incur financial penalties if this is not adhered to.
Cash till payday loans are undoubtedly a perfect solution for emergency situations which require money to resolve them, like a broken down car or an unexpected utility bill. There is very little qualifying criteria and the process of loan application to cash deposit is extremely quick therefore completing the emergency situation perfectly.
Wikipedia’s explanation of a cash till payday loan is ‘a small short term loan, secured against a customer’s next pay check.’ They are also known as pay check advance or cash advances. The premise behind this is exactly what it says, borrowing an amount of cash until your next payday when you repay the borrowed amount of cash! Easy right? Well no, there is a little more to it than that. It is wise to read up on what to expect before making the decision to go to a direct payday lender.
To apply and be successful for a cash till payday loan, you must be on a company’s payroll and be able to provide employment records. The direct payday lender needs to be assured that you have the capacity to be able to make the repayment.
The process of obtaining a loan can be two fold. The transaction can either be done via the internet or via a retail store. If you decide to proceed via a website, you will have to complete some personal details on the webpage and submit your application. Someone from the lender will call you to discuss your application and highlight the terms and conditions. You will provide your bank details so that the deposit can be made into your bank account to the amount that you have agreed. You will then be debited that amount plus interest on your payday date which will be agreed and within the agreed term set out by your lender.
If you decide you want to visit a payday lending store, you will liaise with someone face to face who will outline the terms and conditions and advise you of the fees involved. The borrower will write a pre-dated check which the lender will cash on the payday date. If this cheque bounces, the borrower will continue to incur additional fees until they make the repayment.
The interest rate or ‘APR’ that is charged is much higher than you would normally expect from a bank or any other type of loan i.e. a car loan. This is because the concept is that the borrower will be borrowing for a much shorter timescale i.e. one month. If agreed payments are not made, the borrowers will rapidly incur increasing amounts of debts.
Payday loans can be very useful sources of income if used in the right capacity. For example if you incur an unexpected bill, a short term loan would cover that. If your car breaks down and you need to get it fixed in order to keep going to work then again this solution is appropriate. It should not be used for things like holidays, shopping or other ‘luxury’ goods.
Cash till payday loans is a pretty simple concept. Approaching a direct payday lender is a good move if you completely understand the advantages and disadvantages of the transaction. Providing you stick to the terms and conditions agreed and use the facility sensibly, it can be a great short term cash flow solution.
Cash till payday loans have been available on the financial market ever since they were first introduced in 2006. Their premise has not changed over the years and they are still widely promoted as being short term sources of income to assist ordinary people with financial emergencies. They pride themselves on being very easily accessible via the internet 24 hours a day and seven days a week and also accessible to a wide market thanks to their lenient qualification criteria. However, although this criterion is pretty flexible, it does mean that applicants must meet certain criteria in order to qualify for the loan, therefore let’s look at this in depth to determine if payday loans are available to people who get paid weekly.
The first thing to note is that there are thousands of cash till payday loan available on the market. This means that each of these companies will have different qualifying criteria for their payday loans. Therefore in order to give yourself the best possible chance at being accepted for a loan, especially if you get paid weekly, then the best advice is to apply for a payday loan via a broker.
The most generic criteria that cash till payday loan companies require to be met is that the applicant must be aged 18 years old or older, a UK citizen with a UK bank account and earn £750 per month or more. This must be evidenced by displaying a company payslip detailing the salary payments which are deposited into the UK bank account each month. Therefore if you are paid on a weekly basis, as long as you meet these criteria you should be eligible for a cash till payday loan.
The reason that cash till payday loan companies may be reluctant to lend to an applicant who receives a weekly salary is because they prefer the security that a monthly salary offers in that the deposit of money will be higher and available on the day of payday which would be adequate to be able to repay the payday loan. Weekly salaries means that only smaller amounts of money will be available at any one time and might not be enough to cover the payday loan.
Payday loans are available to people who receive a weekly salary, however they are in smaller supply than those available to people who receive a monthly salary. Therefore to ensure that you give yourself the best chance at being accepted for a payday loan if you do receive a weekly salary, the best thing to do is to apply for the loan via a payday loan broker.
More people than ever are finding it hard to secure a loan of any description be it a credit card, personal loan or payday loan. This is because the double dip recession has forced many families to breaking point as the impact of redundancies, pay freezes and hiked prices takes its toll on family budgets, effectively forcing them into the red. Families are simply finding it harder and harder to survive which is pushing their credit limits to the max and their overdrafts to the brink. Cash till payday loans have been introduced in retaliation to the demand for more short term loans to assist families with making their salaries last each month.
There are now thousands of cash till payday loan products on the market. The generic business model for this product is that it is a short term loan for a period of time between 15 and 31 days. The amount that can be borrowed is usually £50 to £1000 and the average rate of APR (interest) is 1737% which is equal to £25 for every £100 borrowed for a month. The loan can be ‘rolled over,’ which means that if a customer is unable to repay the loan by the agreed date, they can postpone the date by a month, however this will incur another months interest therefore making it more expensive.
The typical qualifying criteria for a cash till payday loan is the following:
The consumer must be 18 years old or over
The user must have a UK bank account (and debit card)
The user must be in either part time or full time employment
The user must earn a minimum of £750 per year
Therefore the general rule of thumb is that you must have a UK bank account AND a debit card in order to qualify for a payday loan. This is mainly for practical reasons as the payday loan company will need a UK bank account to make the cash deposit, otherwise how will you obtain the cash? Be very wary if anyone advertises services to the contrary as receiving a cash deposit over ‘the shop counter’ is a very unprofessional way to do business.
Payday loans usually require a UK bank account as well as a debit card as a minimum requirement for obtaining a loan. This is because having a UK bank account facilitates the process of the cash deposit into the applicants account. Therefore try and obtain one before applying for a loan to give you the best possible chance of being accepted for the loan.
Chris needed to borrow £100 until payday. He applied here online and got his money within the hour. Chris repaid his loan when he got paid 28 days later at a total cost of £125.
