A payday loan, often known as a cash advance loan, is a small, short-term unsecured loan. They are on offer to people who receive a regular salary and the idea is that they are payable on your next ‘payday’. Most people will borrow in the region of, or below, £500 but they can range from £50 to £1000. However, borrowers must be aware of interest rates, which can be occasionally extortionate. There are no restrictions on annual percentage rate (APR) for payday loans so it could, in theory at least, be 1000% or more. Customers can, therefore, build up immense amounts of debt in interest, depending on how much they have borrowed and it is important to pay the debt off in full at the next ‘payday’ event and not to wait for another month. If this happens, the interest will continue to accrue and the debt might soon become unmanageable.
Payday Loans in the UK
Payday loans have become increasingly popular in recent years with around 4 million loans being taken out today, compared to 1 million ten years ago. The majority of borrowers, however, have incomes of below £25,000. These people often need the loans to pay off immediate living costs. We all have costs that are unforeseen and payday loans offer the opportunity to get through these times of struggle.
UK Regulations for Payday Loans
In April 2014 the UK government placed strict restrictions on companies that sell payday loans and borrowers. The main regulations included that firstly, companies should only lend to borrowers if they could afford the loan and secondly, payday loan companies should provide their customers with information regarding all the ‘Dos’ and ‘Don’ts’ relating to payday loans and the pros and cons of taking one out.
Loan2Payday is an on-line lending website that specialises in offering payday loans to customers who might have a low credit rating and are unable to secure finance at more traditional outlets of finance. They are a reputable lender and make it clear on their website what a payday loan is and why you might want to take it out. They also make perfectly clear the rules that lenders and borrowers are expected to abide by. Loan2Payday offer an APR of 305%, much lower than many other companies.
How do you qualify for a payday loan?
As already said, it doesn’t matter what your credit rating is for you to get a payday loan.
However, there are some basic requirements that you do need to fulfil:
- You have to have a bank account and this need to be verifiable by the company.
- You must be over the age of 18.
- You must have a job that generates a regular income.
How do you apply?
The application process is usually very simple and usually only takes a few minutes. You will tend to fill in an on-line application form giving your personal details and your bank details (you can often do this over the phone if you would prefer).