A financial emergency can pop up anytime. In times when there is no saving, bad credit score people find payday loans a helpful option. There are horror stories about debtors getting entrapped in the payday loans debt cycle. There are also facts about how people have overcome their financial crisis with payday loans. It has its bright and dark side. Let’s check it out to understand how the bright side of payday loans outweighs the dark side.
What’s a payday loan?
Payday loans are a type of short-term loan designed to sustain people’s financial issues until their next monthly paycheck. The funds get paid directly in your bank account. You will need to repay the principal amount along with interest and processing charges as soon as you get your monthly salary. You can borrow payday loans for a long period that is a maximum of 3 months and repay in agreed installments.
The common aspect of the loan is –
- It is short-term
- It is for a small amount
- It accompanies high-cost
Generally, a payday loan has to get repaid along with interest, but some lenders allow their customers to choose repayment time. It is an expensive way to resolve your disastrous financial crisis, so think seriously before grabbing it because if you miss the repayment, then the situation worsens.
Due to high-interest rates and costly fees, the borrower can get trapped in a repeat cycle of taking another payday loan to pay the old one or rolling the debt for another week. Remember, a payday loan is not an answer to financial shortages, but you need to learn ways of handling your budget. You can choose the route, but with a committed plan to repay it on time. Responsible borrowers have always found it to be a great approach in their sudden emergency.
With online direct lenders like LoanPig.co.uk you gain instant short loan term in a few clicks. It does not mean you blindly start borrowing. Learn how direct lenders works, benefits, eligibility, and many other relevant aspects.
Online payday loan processing through mobile apps
The majority of direct lenders do their business via apps. The loan application process is simple.
- Download the app and get registered.
- Fill the application form including, your bank, professional, and personal details.
- Submit the form with requisite paperwork.
- Confirm through OTP.
- Now, wait patiently for a reply!
If your application fulfills the potential lender’s basic criteria, you get the cash disbursed in your bank within an hour. In case, your application has some gaps then the lender will give you a call for verification of specific details that can postpone the disbursal.
Payday loans have a bad repute through media, but still, borrowers are choosing it. Borrowing is not an answer all the time. You need to learn exactly when and how to borrow short-term loans as well as be confident to repay the amount. There is a bright side of payday loans, which makes it useful to borrowers in specific situations.
The bright side of payday loans
Accessible to people having bad credit
Traditional lenders reject loan applications with bad or no credit score as it carries high-risk. Therefore people with dented or no credit scores find it hard to borrow money in emergencies. Payday direct lenders are strict in evaluating affordability criteria but have offset high risk with high-interest rates. Therefore their loan approvals are more than traditional financial institutions.
Simple application process
Today, online is a convenient way for the loan application process. There may be a need to provide some more evidence, but the cases are rare. For several people, credit application involves filling a form online with their sensitive details. The details are necessary for the lender to make a rapid decision. The whole process is encrypted, so you don’t need to get worried about security.
When you get registered at a payday loan lenders website to apply, you gain access to an online account. Log in, and you will get a view of your existing current loan balance along with repayment dates. You can even make online repayments. Loan management is easy and if you have funds available make early repayments to close the debt.
Timely repayments lessen the burden
Online lenders make use of different advanced technologies like they send repayment reminder text. It is helpful because you can maintain your bank account balance to cover the installment, which gets automatically cut employing a Continuous Payment Authority. Reminders mean you will not forget your repayment date and prepare for it.
No usage limitations
You can use a payday loan any way you like. Unlike a car or home mortgage, where the loan amount has to be used for the purchase of vehicle or property, payday loans have no limitations. You can use it to travel or purchase anything. However, it is strictly recommended to apply for short term credits only in times of life emergencies and necessities.
Instant funds for emergencies
Your boiler collapses or car tires need replacing, and you hardly have time to wait for the traditional borrowing process for getting approval. Online direct lenders are a great help as it saves you the physical office trip, and the amount gets transferred in your bank account within half an hour of successful application.
Can save money
Bounced checks, overdraft charges, default fees, etc. can build up fast. Borrowing money to cover unaffordable expenses can reduce the overall amount you pay. Do this only if you are confident to repay it on time.
For example, you are on the brink of missing a minimal credit card installment and have an unapproved overdraft of $25. A loan of $110 can save you. You can save on late penalty charges of credit card installment of possibly $30 and even pay the unapproved overdraft. Thus you can save overall $110 a month. Fortunately, the legal standard for borrowing $100 from a direct lender is less than $25 in interest across one month. Financial Conduct Authority ensures that borrowers don’t have to repay double the amount they borrowed.
Short term effects
There are credit forms that can trap you in debt for over a year. Payday loans are designed for extremely short term borrowing – a couple of weeks or days. It will not lengthen across a year.
Direct lenders are available even when the banks are closed. The online application process offers an opportunity to get a loan anytime. In the same, way repayments can be managed conveniently.
The borrower is in control of the borrowing amount, repaying terms, and on-time repayment of the loan. Everything is written in the agreement, which helps to make an educated decision. What borrowers must not forget is choose a reliable lender, understand the fine prints, and borrow an amount that can easily be repaid on-time along with the interest.