What Are Payday Loans?
Payday Loans have received a bad press in recent years, because of the interest rates charged by some lenders. They have been somewhat unfairly treated though as by nature loan interest fees increase as the term of the loan decreases. They have served an important role for many in providing emergency funds in the short-term.
There is no specific definition of any loan type, however. Payday loans could also be referred to as short-term loans. Here at Moolr, we offer competitively rated flexi-cash loans for those needing a short-term financial boost. In the past payday loans have generally referred to loans whereby up to £1,500 is borrowed from a lender. The repayment date set as after the borrower’s next payday.
The money is transferred directly into the borrower’s bank account in one lump sum. It is generally repaid in full in one go too after the next salary goes into their bank account. This is often the last Friday of the month.
Limits on Flexi-Cash Loans
Often, a first-time borrower is restricted on the amount they can borrow, with £500 being a common limit. Usually they can borrow more on subsequent loans. A typical loan, as it is repaid on the next payday, will last 7, 14 or 21 days. Some lenders will allow repayment periods of up to 45 days, or over 3, 6, or 12 month loan periods, with repayments in instalments.
There are certain criteria that must be met in order to apply for a loan – you must to be over 18 and in full time or part time employment and living in the UK. Generally you will need to have a UK bank account too, in which the funds will be deposited. Most lenders will carry out credit checks when making their decision but there are also lenders who offer bad credit payday loans and for those people on benefits.
Applying for a payday loan could not be simpler. Simply use the lender’s simple loan calculators to see what you could borrow today. An application form will need to be filled out and if successful, funds will be deposited in your bank account often on the same day.
Reasons To Take Out A Flexi-Cash Loan
Flexi-cash or short-term loans are specifically designed for certain circumstances only. This purpose is for a one-off (usually unexpected) cost, that you are struggling to cover before your next payday. This could be to pay for a vehicle repair, an important home improvement/emergency or a medical bill.
You need funds urgently. You need the money in your account quickly. Short-term loans are excellent for this purpose. Many receive funds the same day, whilst many payday lenders may have the facility to deposit funds with an hour. They will send funds to you so that you can get on with your life. You can plan accordingly. Budget the repayment(s), and sort out your finances. Deal with that short-term emergency, or repair that long-faulty gutter.
Ideally we would all have some money put aside for such occasions, but it’s not always possible to be able to put aside wages each month for a one-off emergency. Just occasionally, many of us need a little hand, if only in the short-term.
Why is it important to compare short-term loans?
It will soon be law for there to be a place online for potential borrowers to compare loan rates for UK lenders. Such comparison sites already exist anyway, and are a useful tool for finding the best deal for you.
Like any financial product, different lenders have different rates and offers, and thus it is good to see what they have to offer. Studies have shown that repeat borrowers often go back to the same lender time after time without looking to see what else is out there in the market. By finding a cheaper payday loan, the average customer could save over £100 a year. This is where Moolr can help, as we have gathered together many of the best lenders on the market.
All loan lenders are required by law to display their annual percentage rate on loans, or APR. Lenders are thus upfront with charges. They display clearly what you have to repay. Traditionally loans offered in the UK were for a year or longer, so this method of comparing rates was not a problem, but with shorter-term loans it can appear misleading, as repayments do not last for that long, so the rates look artificially high.
Types of payday loans
As I have already mentioned, it is perhaps unfair to bracket different types of short-term loans – at the end of the day, like any loan, the differences are quite easy to clarify – the length of the repayment period, the amount borrowed, and the interest rates. As a borrower, those are the only three things to focus on. With that in mind, search out the best deal for you. Fund the perfect loan for your individual circumstances.
