A Short Guide to Taking Out a Payday Loan

If you are in the process of thinking about taking out a payday loan there are a few different aspects that must be considered. Whenever you take out any sort of financial product or service it is important that you are fully informed before making a decision about your next steps, and with this you should always look to utilise the expertise of a responsible and reputable payday loan direct lender, with the track record of transparency and success in helping all sorts of different types of people in gaining a short-term payday loan. Here, we have put together a short guide about payday loans to provide you with the information you need.

A payday loan is a short-term loan that acts in the same way as an advance from your employment. It is a different financial product to a traditional personal loan that you would apply for from your bank. They differ due to being over a short period of time (usually up to one month in total), and they are also usually for small amounts of money (between £100 paid back over a month up to £1,000 paid back over 5-months in most cases).

Most people are scared off payday loans when they look at the APR attached to it – which can often be in the 1000s. The APR displays the cost of the borrowing over the course of a year, with a payday loan designed to be paid back within a month in most cases. Therefore, it is not an accurate reflection of the interest you will pay back should you make a full repayment within the agreed terms of a few weeks or a few months at most.

Most modern payday loan company websites will have a sliding calculator where you can see a true visual representation of exactly how much money you can borrow and the interest attached based on your requested repayment period. This is a brilliant way to cover the transparency issues, which had previously dogged the payday loan sector.

Recent regulations have changed the way that payday loan companies can operate, with a customer no longer being charged over 100% of the amount borrowed in interest, fees, and charges, and there is now a limit on the number of times a lender can access the bank account of a borrower in order to repay an outstanding sum.

Before you commit to taking out a payday loan it is vital that you consider all other options open to you. Payday loans through direct lenders are not always suitable, but if you feel you definitely have the means with which to pay back a short-term loan, and can do so within the agreed repayment period and you won’t get into any further trouble as a result, it could be the answer to your short-term financial problems. Make sure you research the market thoroughly and find the payday loan lender that is most suitable to your needs and displays the highest levels of transparency.