Because they do come with high-interest rates attached to them people should think carefully before they apply for a payday loan online. Is their financial need really pressing enough that they cannot wait until they get their next pay cheque? In many cases though, the answer is yes, especially if it is a bill that must be paid or there will be consequences to be faced (the rent or an overdue utility bill for example)
Many of the people who turn to short-term loan providers online do so because they cannot get a loan from their own bank or building society, either because they have a credit report that is less than spotless or because they are not a homeowner and have no collateral to put up in order to get a secured loan. Short term loan companies tend to better cater to these people, offering small loans without holding borrowers to the same high credit score standards a bank might.
What Requirements Do You have to Meet to Get a Short Term Loan Online?
There are now quite a number of different short-term loan lenders operating in the UK and all of them have slightly different criteria that a person has to meet in order to qualify for a payday loan. All lenders, however, require that an applicant is over the age of 18 and able to prove that they are a legal UK resident. They must also have a verifiable source of regular income and a bank account, as loan repayments are usually scheduled to be taken out of a loan recipients bank account automatically on the day the payments are due.
All responsible short-term lenders do perform a credit check and they also verify that the employment and income information an applicant has supplied is indeed correct. As previously mentioned, short-term lenders are often far more lenient with people who have less than perfect credit than most banks and building societies are but you are never guaranteed a loan.
How Fast Can You Get a Short Term Loan Online?
One of the big “selling points” of payday and short-term loans is just how fast you can get the funds from the loan into your bank account. A traditional loan can take days, even weeks to fund, but most payday loans are approved and funded within a maximum of 24 hours. A number of companies though boast that they can get you approved for, and fund, a payday loan in less than an hour.
When you will actually be able to draw on those funds though will depend upon your bank’s policies. Even though the lender sends money to your account via electronic transfer very quickly, not all banks ‘post” these kinds of deposits right away. Some banks only post deposits on regular business days and at certain times of the day. That could mean that even though a short term loans lender approved your loan and sent your loan funds to your bank at lunchtime on a Saturday you may not be able to draw the money out until Monday morning anyway.
How Much Do Short Term Loans Online Really Cost?
Because they come with high-interest rates and fees (in comparison with most traditional bank loans) attached to them, many people are critical of payday loans. If you are considering taking one out it is very important that you understand just how much it is going to cost you to pay the loan back when it becomes due.
In response to some of the critics, and as a result of some changes in the law, most of the companies who offer short-term loans online have now gone out of their way to be as transparent as possible about the fees and interest charges attached to their loans.
Many companies now feature a slider or a calculator right on their homepage that lets potential borrowers know right from the start just how much paying back a payday loan online is eventually going to cost them. From there though it is up to the consumer to decide if the loan really is the right move for them to make.
The biggest mistake that some people who take out a payday loan online make is taking out another loan, from another company, to pay off the first one when they find that they just cannot pay off the original loan. This does often lead to a spiral of debt that becomes hard to get out of.
If you do take out a short-term loan online and find that you have difficulty paying it back on time talk to the lender before you take out another loan to satisfy the first one. many lenders will be willing to work with you to renegotiate a payment schedule you can meet.