So, you have come here as you are looking for bad credit payday loans. Well congratulations you have taken the first and correct step, towards finding a loan suitable for your need. It is difficult to find someone willing to offer you a loan if you have a poor credit rating and no one understands that better than we do at Bonsai Finance.
There may be many reasons why you have fallen under the bad credit bracket and it really does not matter what that reason is. It does mean that finding loans with attractive rates of interest is going to be challenging. However, it may be that you do not have the need to borrow many thousands of pounds and you can repay the loan back quickly. In this case, there is no better loan to consider taking out than a payday loan.
In this article, we are going to cover many aspects of payday loans, including:
- What makes a payday loans more suitable?
- What constitutes a regular income?
- What is a payday loan?
- Criteria for applying for a payday loan;
- Regulations surrounding payday loans;
- Interest rate on payday loans;
- Credit checks – will I have to have one?
- How to apply for a loan with our help.
Why Are Bad Credit Payday Loans More Suitable?
Payday loans are more suitable for people who have a less than perfect credit rating due to the fact that the loan applied for is relatively small in the grand scheme of things. Typical personal loans are often in many thousands of pounds repaid over many years.
The payday loan differs as you can only borrow a small sum of money, usually between £100 and £500 and you repay the loan within one to three months.
You can ask to borrow money via a payday loan for just about any reason, but some reasons are more common than others are. People usually use these types of loans to pay off an unexpected bill or other financial outlay that has cropped up unexpectedly. Common reasons include:
- Paying for car repairs;
- Paying the MOT bill;
- Replacing tires;
- Paying off a final demand bill;
- Getting out of an unauthorised overdraft;
- Paying for repairs to home appliances or replacing home appliances.
The above are the most common reasons why people with poor credit apply for payday or short-term loans, but you might have a different reason. Just because that factor is not on the list, it does not mean that you cannot get a payday loan.
Can I get a Payday Loan If I am not in work?
When applying for a payday loan one thing you will be asked, is how much monthly income you have coming in. This is so the lender can assess whether they think you can afford the loan.
They will also ask about your outgoings and this goes towards determining how much money you have left over each month. This money is called expendable income and is what you can use to repay the loan.
You might be in a position to be able to afford the repayments of the loan but you are not in work, instead you have regular benefits paid into your bank account. Depending on the type of benefit you are paid, you might still be eligible to apply for and get approval for a small loan.
How Much Can I Borrow and How Long For?
As mentioned before payday loans will usually be offered in the region of £100 to £500 in the UK. Anything above this and the loan might fall into the category of a short term loan. To meet emergency financial outlays that have cropped up this amount is usually adequate. If you need above £500 and want more time to repay the loan you may want to consider applying for a short term loan instead.
Regardless of how much you borrow with bad credit payday loans you have to repay the loan back quickly. Lenders used to request that you repay the loan back in full on your next payday but now this is extended for up to three paydays. This should grant you enough time, as the sum borrowed and any interest would be spread over three paydays, making the loan more affordable. In the end however, the amount borrowed is going to cost you more, as more interest is added on.
With this in mind you are going to have to ensure that the loan is affordable, as you will be short of money on the payday the loan is repaid, but you don’t want to have to pay too much interest.
As payday loans are not taken out over the long term, they do not accumulate interest in the same way as personal loans. Personal loans have interest added based on the amount of years the loan is taken over, hence the term APR. The payday loan has interest added daily. This means if you can pay off the loan quicker than you anticipated you can save money on interest.
What Is The Criteria for Applying?
All loans have certain criteria that those applying must meet before they are eligible and payday loans are no exception. The criteria may differ depending on the lender, but generally, you should:
- Reside in the United Kingdom;
- Be over 18 years of age;
- Have a regular income (salary or benefits);
- Hold a bank account and debit card;
- The bank account should accept direct debits.
This is the basic criteria but of course, you are going to have to meet the requirements set out by the lender in regards to income and outgoings too.
Payday Loans Are Regulated
While payday lenders caused a bit of a stir back when the loans first arrived on the market in the UK from the USA, thankfully, times have changed and today the FCA regulates them.
This means that gone are days when unscrupulous lenders charged over the odds in fees and interest on payday loans.
This is not to suggest that payday loans do not attribute to debt issues as they do the same as any other type of loan. If you find you cannot repay the loan on the date or dates agreed, the loan is going to extend and more interest is accumulated.
The FCA has done a lot to make sure that loans cannot spiral too much out of control, but in the end it is down to you to make sure you are 100% positive you can afford to repay it.
The lenders we work with will do their very best to make sure that they only lend money to those who can clearly show they can pay the loan back, but you should check this before applying.
The APR is high on Payday Loans!
The loans are no different to other loans. You borrow a sum of money and pay back the money borrowed along with interest on the date or dates agreed. No lender is going to allow you to borrow money without paying any interest on it, while this would be nice, it is not how it works in reality.
One of the biggest differences you will note when searching for a loan is the APR. On personal loans, it averages around 34% if you do not have a good credit rating, perhaps higher. With the payday loan, the APR may be advertised as thousands of percentage APR.
What is significant is that you are not paying over the year, so the annual percentage rate is not what is paid. Interest is added daily, so the least amount of time you take the loan over, the less interest is paid.
Will the lender Check My Credit Rating?
It is logical that if you do have a poor credit rating you are worried that the lender is going to check it and deny you a loan. You should not worry too much about this when considering applying for a small payday loan. The lender will check your credit rating, all UK lenders have to do that, but they will not look too deeply into your credit rating. This means you can still apply for a small loan even though your credit rating is less than perfect.
Lenders pay less attention to your credit file when applying for small loans than they do for a loan of many thousands of pounds. Instead, they put more focus on the affordability of the loan and your current circumstances.
If for some reason, you do not apply for your loan with our help, but instead search online yourself you might find some lenders offering guaranteed loans. There is no such thing, as all lenders have to check your credit file along with affordability before offering the loan. We cannot guarantee a loan, but we can guarantee that your application will be considered.
How Can I Apply For Payday Loans?
One of the easiest ways of applying for a payday loan if you have poor credit is to permit us to search with our panel of lenders to match you up for a loan.
An alternative would be to make a search yourself online and hope that you can find a lender who will give you a loan. Numerous times, you may fill in multiple loan applications only to find that at the end, you do not qualify and you have to begin your search from the start. Not only does this eat into your time, multiple searches may be listed on your credit file and negatively affect your credit rating.
We work alongside ethical payday lenders based in the UK. The lenders we work alongside offer numerous loan options, even for people with a poor credit rating. They also offer some of the most competitive rates of interest along with ensuring that loans are affordable. The lenders we work with will never lend you money if they believe there is no way you could afford to repay it.
Applying for payday loans with our help is extremely easy. Just follow the steps below:
- Make sure that you know the loan is affordable;
- Use the sliders to tell us how much you want to borrow and when you can repay it;
- Fill in the details we ask for including your name, age, address, bank account details and debit card details;
- Provide us with your income and outgoings;
- We search for a suitable loan from a panel of lenders in the UK;
- You check the details of any loan we find to make sure it is right for you;
- Check the repayment dates and make a note of them;
- You sign up for the loan and agreed to the lender taking the repayments from your bank on the dates agreed;
- Money may be paid into your bank account within hours and you can use it for whatever reason you want;
- Ensure that you have enough money in your bank account when the payments are due.
It is possible to find suitable bad credit payday loans online with our help. Lenders we work alongside will ensure that the loan you are applying for is affordable while at the same time offering some of the best rates possible for your circumstances. It takes just minutes to make an application or a payday loan and you get an instant decision. As we work with a panel of UK lenders, there is more chance of our being able to match you up for a suitable loan.