Payday loans are a specific type of borrowing that many
people now know about despite it being reasonably new compared to more
traditional means. There are some main differences between them and more
standard methods of borrowing and it is good to think about whether they might
be suitable for you. There are not really any traditional loans that compare to
them, so it is good to have an understanding of the main features so that you
can decide whether you feel that they will work out for you.
Lend to all
The main selling point of payday loans is that they will lend money to almost anyone. They do not worry about whether you have a poor credit record, they will just look at you age, place of residence and check that you have an income in order to decide whether to lend to you. Most traditional lenders will look at your credit record to see what it is like and use that to decide whether to lend to you. They will want to see whether you have a history of making payments on time, this can include bill payments, contracts and loan repayments. They might also look at how many debts you have, if you have been turned down by lenders and whether you have a secure income. This can mean that anyone with a poor credit record is at risk of being turned down for a loan. This will then be marked on their credit record and make it even harder to borrow money. A payday lender will look at the credit report but will not judge on the same basis. They will want the borrower to have an income but that is pretty much all they will be concerned with.
Quick to lend
A payday lender tends to organise loans really quickly. This means that they can be really useful if you need money in an emergency. They will often be able to get the money to you within a few hours. It will be up to you to complete the application accurately and quickly and provide them with all of the information that they need so that they are able to get it organised quickly. Some lenders will be quicker than others and so if you do need the money really quickly, then it is wise to check this first. You will want to make sure that you can get the money when you need it. It is likely that there will be some lenders that will be able to act very quickly and therefore it could be important for you to find them and use them, rather than alternative lenders. If you use traditional lenders you will normally find that it can take them significantly longer to arrange a loan for you.
Quick to repay
A payday loan will normally need to be repaid within a few weeks of borrowing the money. The idea of them is that you borrow the money until you are next paid and so this will not be longer than four weeks. The money has to all be repaid in a lump sum on your pay day and this means that you will clear the whole debt in one go. This can be really useful as you will not be in debt for very long and you will be able to limit the amount of interest that you are paying as it is often calculated daily. Some people are not keen on the idea of being in debt and so the fact that this can be repaid really quickly will be particularly welcomed by them. It can be great to know that you will not be borrowing for long and that you will be clear of debt once you are next paid. Of course, it will be up to you to make sure that you will have enough money available for the repayment and that you will then have enough money left over so that you can pay for everything else that you need to buy.
There are not many other loans where you will be able to get
the money that you need even if you have a poor credit record. There are a few
though and the way that the payday loan is different to these is that the money
is repaid within a few weeks in full. This can be advantageous both with
regards to the cost of the loan as well as meaning that the debt and any stress
associated with it, will soon be cleared. It can also be very fast to organise
which is particularly useful to those that need money in a hurry. Many of us
might have emergencies, where we have run out of money and need some fast and
these loans can help with this.
There are many lenders that now offer payday loans which can
make it quite confusing knowing which one to go to in order to make sure that
you are getting the best loan for you. One problem is that payday lenders are
not the conventional banks and building societies that we are used to dealing
with and that means that there is a bigger chance that we may not have used
these lenders or may not even know anyone that has used them. We see our banks
and building societies as we walk on our high streets, in the news, advertising
and they may even come up in conversation. However, payday lenders tend not to
be seen or even heard about that much and it can therefore be much harder to
decide which will be the best for us to use. We therefore need to find out a
bit more about them so that we can decide which of them might be the best for
us to use.
It can be good to start by asking people whether they would recommend a lender to you. If you ask people that you know, then you will know that you will be able to trust what they are saying. Find out what their experience was like and this should help you to decide whether this sort of lender will work for you. If you do not feel comfortable with asking anyone or you cannot get useful information from them, then try asking online. It might be that you could leave a message on a forum or message board or perhaps on social media, to find out what people think. You may even find information already posted that could help you. Make sure that you use sites that you trust not to be biased such as independent personal finance websites. It is not always that easy to tell whether the information is unbiased though and so looking at a selection of sources could help. Of course, you might not have much time and so you may have to find other ways to make a judgement.
Look at websites
Looking at the lender’s website will help you start to form an impression about them. There might be information about the company which you can use to inform you, but you will also get a feel from the company just form the way that their website is worded. You might be looking for professional., polite, friendly, easy to use, knowledgeable etc. Think about what you are looking for and you will be able to decide whether you think that the website demonstrates this. You may also want to think about looking at other websites. Perhaps ones which review lenders or ones with message boards where people comment on them. Although there is a risk of them being biased, they can still add to your knowledge so that you can build up an idea of what you might like and dislike in a lender and who seems to be the best one to help you get that.
Contact the company
It can also be worth getting in touch with the lender. If you have questions, you will need to but even if you do not, it will help you to get an idea of what they are like. By contacting their customer services department you will get an idea of how helpful and friendly they are, whether they are polite and whether they quickly and accurately give you an answer to your query. You might in a rush to get the money, but if they do not reply quickly, that could be a reflection of the speed that they work at and may mean that they are worth avoiding as they will not get you the money that you need very quickly. If you contact a selection of companies then you will be able to compare their responses. Not only comparing the answers that they give but also how quickly they reply and whether they are accurate, polite, friendly and helpful.
There are quite a lot of things that you can do which should
help you to more easily pick a good lender for you. You will need to have in
mind what you are looking or in a lender and this will help you to be able to
decide which will suit your needs the best. If you spend some time doing this
then you will be much more likely to find the best loan to cover your needs.
This will enable you to be able to borrow money with confidence, knowing that
you will get the best possible service form the lender that you have chosen. It
is important to have this trust as it will mean that you will feel relaxed
during the term of borrowing and know that you have done everything that you
could to make sure that you are using the best lender.