Stories of irresponsible lending, extortionate interest rates and ridiculous fees and charges hit the headlines just a few years ago, leaving many people sceptical about payday loans. But since then, a lot of changes have come about in the industry, with new government regulations introduced to ensure that payday loan companies are lending responsibly, and protecting borrowers from financial harm if they are unable to make repayments. The payday loan industry has had a complete overhaul, with irresponsible lenders shut down, and lending companies working towards fairer, more responsible policies.
Today, there are several trustworthy and responsible payday lenders to choose from, providing an ideal option for those who are in need of quick cash. Here’s why payday lending could just be the future of short-term financing.
It’s Quick and Easy
Borrowing a short-term loan has never been easier. Whether you need to repair your car or replace a broken kitchen appliance, if you don’t have the funds available right now, you can easily get the exact amount that you need in mere minutes. Typically, you will apply for a short-term loan online by entering personal and financial details that the lender will use to determine whether or not they can responsibly allow you to borrow the funds that you need. No need to visit the bank, or wait days for approval – you can have the funds you need to fix whatever financial problem you are dealing with on the same day.
Borrow Small Amounts
Sometimes, you may be in need of just a little bit of quick cash. For example, let’s say your fridge has broken and you need just £100 to purchase a new one second-hand so that you can quickly get your food into it and not have to worry about losing that too. Along with being quick and convenient, payday loans are typically available in small amounts. That way, you don’t have to borrow much more than you actually need in order to cover your unexpected expense, as might have been the case in the past.
Bad Credit Options Available:
If you’ve got a poor credit rating, the chance of being accepted for a loan from the bank is fairly slim. Typically, you will need at least an average credit rating to be accepted for a bank loan, and they are often quite large amounts – it’s unlikely that your bank will lend you just £200. Thanks to the wide range of payday lenders available, even those with a poor credit rating can find an option that is suitable for them. Many payday lenders don’t just look at your credit score; they will also take your income and expenses into account, and base their decision on how likely you are going to be able to repay the loan comfortably rather than your past experiences with money.
Several Lenders to Choose From
Finding the right payday loan for you is easier than ever. Payday UK, for example, is a trusted broker that works with a panel of reputable direct payday lenders. All you need to do is enter your details into the form at paydayuk.co.uk, and they will search their panel for lenders who are willing to provide you with the funds that you need. This can make the whole process of getting a loan much easier, since you can minimise the risk of your credit rating being negatively impacted should you apply for a loan that you are not eligible for and get rejected. And, it allows you to compare your options from various different lenders in very little time. Brokers like Payday UK are changing the public perception of payday loans by taking their customers’ finances very seriously, only suggesting loans and lenders that borrowers are actually eligible for, and only working with responsible lenders who ensure that borrowers are able to make repayments before paying out.
Short Repayment Terms
Perhaps you want to borrow money, but the last thing that you want is to be tied down to a longer repayment term. Borrowing a payday loan means that you can get the debt repaid in a very quick time frame, so you don’t have to spend the next few years budgeting to repay it. Since you can borrow very small amounts from payday loans, you might find that it’s easy for you to repay the loan in full on your next payday, or there’s the option to spread your repayments out over several months and smaller payments, which is ideal if you would struggle to repay it all at once and want to avoid getting stuck in a payday loan cycle.
Compared to other forms of borrowing, payday loans are very flexible and give you more options to take control of your own borrowing. You can choose to repay most payday loans over longer terms, usually up to 36 months; however, there’s always the option to pay it off faster or make larger repayments on the months that you are able to afford to do so. They are also very flexible with the amount that you borrow, and many lenders are willing to offer top-up loans should you need one after proving your ability to responsibly make repayments for the first few months of the term. In addition, many payday lenders offer additional flexibility for those who wish to reduce their monthly payments. If your situation changes at any point and you would like to repay less per month, you may be able to have your payment term extended with no impact to your credit score.
Build Your Credit Rating
If you have a poor credit rating and want to improve it, a payday loan could be an ideal choice for you. Not only are many lenders more likely to accept borrowers with poor credit for smaller loans over a short repayment term because they are less risky, but each time you make a payment or repay your loan in full, it will have a positive impact on your credit score. Since you are not tied into a longer repayment term, there is less risk of your financial situation changing and leaving you unable to make repayments.
Consolidate Debts Quickly
Another increasingly popular use for payday loans is debt consolidation. More and more borrowers are turning to short-term loans to pay off their existing debts in full quickly, leaving them with just the short-term loan to repay over a shorter repayment term. This can be an excellent way to clear your debts in a much shorter amount of time than continuing to make the minimum repayment on several lines of credit. For example, if you have several smaller loans that you are repaying over a several-year period, not only can this be difficult to keep up with when you have various payments coming out each month and interest on each one, but it can also take a long time to repay in full. A short-term loan allows you to repay them all in full immediately and then focus on making just one repayment over a timeframe chosen by you.
Payday lenders used to have a bad public reputation, but recently they have been making some huge positive changes, which has led to a much more favourable public perception.