If you find yourself in a financial pinch and you don’t have the funds to pay a personal loan, a payday lender might be a good option. A payday loan, which is short-term and small, can be repaid once you receive your next paycheck. Payday loans typically have loan limits of £500 or less and don’t require credit checks.
These loans are not difficult to get and can even be very costly. Here’s how payday loans work, what they do to credit, and some alternatives.
The Workings Of A Payday Loan
A payday loan can be obtained online or in-person if it’s offered in your state. Payday loan lenders often do not require you to have a credit history. It is appealing to borrowers who have bad credit, or none at all, and need cash quickly.
Once you apply, a postdated check will be written for the amount you borrowed. This includes interest and fees. You can guarantee that the lender will pay you by your next payday. You can extend the due date by renewing or rolling over your plan with some lenders if you cannot afford the repayments. This will incur additional interest and fees.
Why A Payday Lender Is Right For?
Payday loans can be expensive and more harmful than they are good for. It’s one way you can get money to pay your next paycheck. But the risks are often greater than the rewards. We don’t recommend taking out payday loans. Consider other options, such as personal loans, credit cards, or borrowing money with friends and family.
Costs Of A Payday Loan
How much you borrow, your interest rates, the lender and where you reside will affect how much your loan costs. Here’s an example to show you the potential costs of a payday lender.
LoanPig payday loans allow you up to £500. The charges for each £100 borrowed are up to £15. The additional £75 required to borrow the full £500 is £575. It’s calculated daily. Iowa permits you to borrow money for as long as 31 days. If you borrow the full amount, your APR will be 176%.
Personal loans are typically limited to 36% APRs. The APR for credit cards used to purchase goods is less than 30%.
Repaying A Payday Loan
Most lenders will only allow you to set up one loan repayment when borrowing the money. The loan will be repaid by a postdated, prepaid check. It includes the full amount borrowed and all fees and interest. But, you might also be eligible to pay online and by direct debit from the bank account.
Your loan date will be 14-31 days after you have borrowed it. Payments are usually due by your next payday. The loan can be paid off in one lump sum, unlike personal loans which require monthly installments. Personal loan lenders assess your income to see if you can afford what you borrow. They also ensure that monthly payments fit within your budget.
Payday Loans And Credit
Payday loan lenders rarely run credit checks. Applying for a payday loan won’t have any impact on your credit score. Even if the loan is repaid in full and on time, it won’t affect credit. Do you need 100 quid now? LoanPig is here to help you out.
You could end up paying the loan balance and any finance fees if the lender hasn’t electronically withdrawn the money from your account. If you’re late with payments, your lender can contact a collection agency. The delinquent mark could appear on your credit report.