When they first arrived on the market payday loans were not regulated and unscrupulous lenders took advantage and charged huge sums of interest and fees on the loans. On top of this, some people did not fully understand how the payday loan worked and as such ended up with substantial debts when they did not repay the loan as it was meant to be repaid. Thankfully, payday loans have become more transparent and they are regulated and capped. There are benefits to payday loans for very bad credit and here we look at those benefits.
What Are Payday Loans?
Payday loans are a special type of loan differing from the mainstream loans such as personal or secured loans.
All you need to be able to apply for a payday loan in the UK is to:
- Be over 18;
- Have an income coming into the household on a regular basis;
- Hold a bank account in the same name you are applying for the loan;
- Have a debit card with the name matching the bank account;
- Be able to repay the loan back over the specified periods.
With the payday loan, you borrow just a sum of money in the grand scheme of loans, usually between £100 and £500. A small loan such as this might come in very useful if you find yourself short of cash and you know that you can afford to pay the loan back when payday comes around. Most lenders now allow payday loans to be repaid back over three paydays.
There are numerous benefits to payday loans over other types of loans and these include:
- Your credit rating is not regarded as a big issue;
- This is one of the most convenient types of loans;
- It is a discrete way of borrowing a small cash sum;
- It can go towards rebuilding your credit rating;
- Payday loans are now regulated.
Payday Loans Are Offered Even With a Poor Credit Rating
If you have a poor credit rating, you might struggle to get approval for a personal loan. As the payday loan only offers a small amount of cash and is paid back within a couple of months lenders do not worry too much about your credit rating. This means that they are easier to get approval for than the personal loan.
We work with lenders offering competitive rates on affordable payday loans that could be spread out for up to three months.
Payday Loans Are a Convenient Way of Borrowing
Payday loans are an extremely convenient way of borrowing a small amount of cash if an emergency arises.
This is attributed to the fact that the entire loan process, applying and getting the money, is undertaken online. There is no need to apply for the loan, wait for paperwork to arrive at your home, fill it in with details and return it then wait for the lender to get back in touch with you. You still have to wait for the money to be paid into your account and this whole process could take weeks.
The entire loan application can be undertaken from the comfort of your chair and you could get the money paid directly into your bank account on the same day.
Payday Loans Are Quick to Apply For
With payday loans, the application is quick; you apply online within minutes and know within minutes whether you are accepted. If you are, money could be transferred to your bank on the same or next day. This is excellent news of course if you need to get hold of money in the case of an emergency. Emergencies may include:
- Having to pay a bill you had forgotten about;
- Finding you have gone into unauthorised overdraft which incurs heavy daily charges;
- You need money to finance repairs to your car or an household appliance you cannot manage without.
Payday Loans for Very Bad Credit Are Discrete
Payday loans are a discrete way of borrowing a small amount of money, as you do not need to come face to face with the lender.
Another way of getting hold of a small sum of money is to ask a friend or relative but this is far from discrete and can lead to hard feelings and issues if you do not pay the money back.
Improve Your Credit Rating
By borrowing small cash sums and repaying that money on time and in full, it can contribute to improving your credit rating. Lenders will know that you are trustworthy if you repay on time and this can lead to you getting better deals and interest rates on loans in the future.
Payday Loans Are Now Regulated
The Financial Conduct Authority (FCA) now regulates payday loans and this has done away with the unscrupulous lenders that once offered loans with high fees and huge amounts of interest added onto the loan.
Payday loans are now more transparent with lenders telling you exactly how much the total amount of borrowing this way will cost you. The FCA has also introduced a price cap on payday loans, which means those who take out a payday loan will never have to repay more than double the amount they borrowed.
Payday loans may be a means of getting out of a financial emergency that crops up unexpectedly. They did have a stigma attached to them when they first arrived on the market but a payday loan can work as it is designed to work providing they are understood and repaid on time.
We can help to match you up with lenders offering payday loans for very bad credit, just fill in one application and we can search with the lenders we work with to find the most suitable loan for your needs.