What are Payday Loans?

Of all UK loans, payday loans are quickest loan to get, and also the most expensive, simply because of their short term nature. Payday loans are offered to those who might require money in an emergency situation, but the full amount must be repaid along with the interest within a few weeks. Traditionally, the term lasts until the next pay day, hence its name, but nowadays, payday loans can also consist of a roll over option, which allows you to roll over the amount indefinitely, which is a very bad idea as this just pushes the interest rate up even more, plus there are usually extension fees and additional charges that you will incur if you roll the debt over from month to month.

Payday loans only allow you to borrow small amounts, usually between £80 and £1000, with the interest rate ranging from just over 1000% APR up to a whopping 3000% APR or more. These are only meant for people to use as a last resort emergency, when they have no other option and cannot wait until their next salary payment. If you are looking at a Payday loan, remember that you should only borrow an amount that you can afford to pay back when your monthly salary is paid, and that includes the interest. This is not the type of loan that you need if you are struggling financially, or if you are in bad debt already.

You can take out a payday loan if you are over the age of 18 and even if you have a bad credit history you are usually able to qualify for one. You will receive the money in as little as 15 minutes sometimes, so this is an excellent solution if you need cash in a hurry and you have no other options. One thing to be careful of when you take out a payday loan is that many lenders tend to hide the APR rate from you and simply advertise the total repayment in Pounds, so when you see that if you borrow £100 you will only pay back £125 it does not sound that bad. In actual fact, the APR for this would be 1737% and this can easily get out of hand. Compare the various APR rates even with payday loans to find the absolute lowest one you can. Another aspect to consider is whether or not the payday loan provider has signed up with the Good Practice Charter, which helps you to determine the reputable companies.

Before you take out a payday loan, you must understand the collection practice and also realize that it is common for companies to have hidden costs. If you find yourself in a difficult situation and cannot pay back the loan you should contact the one of the charity debt advice agencies Citizens Advice Bureau, StepChange, and the National Debtline.

The best way to use a payday loan successfully is to only borrow the minimum amount that you need, and pay it back including all the interest as soon as you get your salary. Some of the top payday lenders include loan.Me, PaydayUK, QuickQuid, and Zebit.

So, now that you know a bit more about the various UK loans that you can choose from, you have a comprehensive overview that will help you when it comes to taking out any kind of loan. If you are not sure about which loan option you should go for, you should take all of your details into consideration, including your age, salary, credit rating, current debts, and then also speak to an independent financial advisor, who will be able to point you in the right direction. By knowing what the different types of UK loans can offer, you will be better prepared when the time comes for you to take out a loan for any purpose.