Payday loans offer the opportunity for customers to get their hands on some quick cash when they need it the most. The short term loans are designed to bridge the gap until wages are paid, allowing unexpected costs and expenses - such as bill payments or a forgotten birthday - to be covered. Unlike other forms of credit, money borrowed from a payday loan can be paid directly into your bank account on the same day that you apply (sometimes in as little as an hour). Payday loan websites will normally offer you instant decisions on applications and the whole process can take virtually minutes.
Whilst bad credit is not usually a stumbling block when it comes to being approved for a payday loan, payday loan applicants still have to meet certain criteria. For example, payday loan companies need to protect themselves by ensuring an applicant will be able to meet the credit agreement. But how do payday loan companies know you can pay the money back and what checks are you subject to?
The criteria payday loan applicants have to meet is pretty straightforward. In order to be approved for a loan, applicants must be over the age of 18, a UK citizen and in full or part time employment. Also, payday loan applicants must earn at least £500 per month (take home pay) and their wages must be paid directly into a bank account they hold. Furthermore, applicants must have a debit card for their bank account. Obviously, an applicant must supply their name, address, email, telephone number and full bank account details. Proof of employment and employers details may also be required.
Applicants who meet the specified criteria should have no problems in getting a payday loan, depending on how much they wish to borrow. Payday loans can range from £50 to £1200. The smaller the amount which applicants ask to borrow, the more likely they are to succeed in their application. Larger secondary loans from payday loan companies can be approved for previous applicants who have successfully paid their loans on time.
However, it is worth noting that in order to protect themselves and ensure that applicants can pay the money back, payday loan companies will not generally lend borrowers more than they earn. For example, if you apply to borrow £1000, but you only earn £500 per month; your application is unlikely to be successful. This is simply because payday loans are, as noted above, designed only as interim or short term loans, which are to be paid off in full when the applicant next receives their wages. Loans are automatically deducted from the applicant's bank account (using the debit card details supplied) on the customer's next pay day date.
As debit cards are a vital component in paying back payday loans on time, customers are urged to ensure that if any problems should occur (e.g. debit card details are changed as a result of a lost, stolen or updated card) then the payday loan company is informed as soon as possible, to avoid unnecessary charges.
Payday loan companies will endeavour to assist applicants if they need to defer payments, although extra charges may be incurred on the account as a result of this. Customers are strongly advised not to borrow money that they cannot pay back and to contact the payday loan company as soon as possible if they experience problems.
APR rates on payday loans may seem rather high, however usually companies break down charges so customers can easily understand the borrowing process. For example, a flat fee of £25 per £100 borrowed is usually charged on payday loans.
About the Author:
Vincent Rogers is a freelance writer who writes for a number of UK businesses. For Payday Loans, he recommends Payday Power |
