UK PAYDAY LOANS

WHAT'S A PAYDAY LOAN

Unexpected expenses during the month when payday is still far away are not uncommon to most of us. Your car may breakdown suddenly, you may want to throw a surprise party to your mate or you may have to go on a short trip. The list goes on. Payday loans are designed to meet such short-term financial emergencies. They provide you with ready cash to pay-off such unforeseen expenses. You can repay the loan after you receive your salary. In fact, payday loans are so called because their repayment generally coincides with your payday. The loan is usually paid off within 14 days.

The amount you can borrow depends on the lender. Most of the companies provide short loans ranging from £50-£80. The maximum amount varies from £500-£800. The amount you qualify for depends upon your earning capacity. You need to repay the amount along with interest on your payday. Sometimes it is possible to renew the loan until later paydays.

The rate of interest, technically known as Annual Percentage Rate (APR), varies slightly from lender to lender. Typically you can expect to pay £25 for every £100 you borrow. There are no processing costs or administrative charges. All you need to pay is the principal and the prescribed interest. You can use the loan calculator provided on the company website to workout how much you need to pay.

ADVANTGES OF UK PAYDAY LOANS

Apart from helping you to deal with short-term cash crunches, payday loans offer various other advantages. They are especially handy when it's not possible to max out the credit card or obtain an overdraft on your account. Eligibility norms are so simple that you don't need to be apprehensive about qualifying.

You are not asked any embarrassing questions at the time of processing the application. There's absolutely no need to mention your reasons for the loan. You can make an on-line application by giving just the minimum details. Funds are credited to your account on the same day or on the next business day from the acceptance of your application. If you can go to the lender's office they give you cash on the spot.

There are no credit checks. You don't have to worry about bad credit history. It's enough if you can convince the lender about your earning and repaying abilities. All the information you give is treated with absolute confidentiality. Unless required by law your personal information is not revealed to anybody. The lender does not contact your past or current employers to enquire about your financial viability.

ELIGIBILITY NORMS

In order to qualify for a payday loan you need to meet the eligibility norms of the lender. Despite some minor differences all the lenders have two common conditions - you must be living in the UK and you must be at least 18 years old. Usually it doesn't matter whether you live in own house or on rented premises.

You must be working either full-time or part-time. However, most lenders expect that you

should have been associated with the present employer for a certain period. The minimum period ranges from 3-5 months from the date of the loan application. Some lenders such as 'The Payday Loan Company Limited' accept self-employed applicants, too, as long you can satisfy that there would be enough funds in your bank account on the day when payment is due. But companies such as 'ePremier Finance' don't lend to self-employed people.

Many lenders expect you to have a minimum monthly income which ranges from £750-£1000. 'Provident Personal Credit' lends to people with monthly incomes less than £750. 'ePremier Finance' lends to you if your net pay is at least double the amount of the loan you apply for.

You must have a valid UK current account and you pay must be paid directly into your account either weekly or monthly. Depending on the lender the account should have been active for at least 3-5 months from the date of your loan application. For some lenders it's enough if the account is active when you apply for the loan. Usually you can repay the loan through post-dated checks and are not required to hold a debit card. 'Payday Express' requires you to have both a check book and debit card. 'Mem Capital PLC' accepts only Switch, Solo, Visa Delta or Visa Electron debit cards.

Usually you are required to produce last two months pay-slips and bank statements along with the application. Many lenders waive this condition for subsequent applications. If you are approved once you are always approved by them.

Your application is rejected if you have applied for bankruptcy in the previous year or applied for bankruptcy many times in the past. However, 'The Payday Loan Company Limited' does not disqualify even if you have a county court judgment for an outstanding bill. But you must convince that there would be sufficient funds in the account on the payday.

Though there are no credit checks the lender generally refers the national databases to verify your loan and check clearance history. Your application may also be rejected if you have an outstanding payday loan or if you have taken too many overdrafts on your account or if your checks are frequently returned unpaid. Other grounds for rejection are providing wrong or invalid information regarding your bank account, employment etc.

APPLICATION PROCEDURE

You can procure the loan application by calling the lending company. The company will post or fax the form as per your choice. You can also take a print of the PDF form available on the company website, fill it up and post it. Filling up the on-line application is the easiest and fastest way to apply. It is very simple and does not take more than 2-3 minutes. You can enquire for free of cost whether you qualify and how much credit is available to you; there's no obligation to avail the loan.

Within five minutes to one hour from submitting the application lender's customer service executive will contact you either through e-mail, fax, post or phone, whichever is most convenient. You will be informed whether your application has been approved and how much loan you qualify for. You need to give such additional information as may be required.

On being approved, you are sent two copies of Credit Agreement; you need to sign and submit a copy to the lender. If you propose to repay the loan through post-dated check the Agreement should be submitted along with your repayment check. You can submit it in person and collect the cash from the lender immediately. Alternatively you can ask the lender to credit it to your bank account. Funds are transferred to your account within one business day. Some lenders transfer on the same day.

REPAYING THE LOAN

The due date is determined as per your payday as it is essentially a payday loan. The loans are for short-term and should be repaid in two weeks time. Therefore, the due date may not always coincide with your payday if you have availed the loan for a period longer than 14 days. If it causes any inconvenience to you, you can request the lender to change the due date.

Unless you apply for a renewal, the lender will clear the loan on the due date either by encashing your post-dated checks or by processing your debit card or by withdrawing the prescribed amount from your checking account, depending on your payment method. If the funds in your bank account are not enough you are contacted by the lender's employee so that you can make up the deficiency. You need to pay an additional fee for insufficiency of funds. If you neither apply for a renewal nor repay the loan, the lender can take a legal recourse to collect the dues.

RENEWAL

In order to get a renewal you have to inform the lender at least three business days in advance before the payment is due. Then you are provided with a new copy of Credit Agreement which you need to sign and submit. After renewal you can just pay the interest amount on the due date and postpone the payment of principal and accrued interest to the next payday. There are no restrictions on how many times you can renew the loan. But you should remember that these loans are short-term loans and try to pay them off at the earliest. If fail to renew the loan is cleared by the lender in full.

NEW LOANS

You are not eligible for a new loan as long as an existing loan is outstanding. In case you have paid off the loan in full and want to apply for a fresh loan, you need to wait for a prescribed number of business days so that the lender can confirm that your payment has been successfully received.

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