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.