Considering a payday loan? If so, they can be helpful in emergencies and provide you with cash quickly, providing flexible repayments to match your budget. As they are convenient, it’s tempting to go ahead and apply straightaway, but before you do, you’ll want to have a good understanding of how they work and what to consider first. Below, we'll go through each step, ensuring you're aware of what to expect when applying through payday loans lenders and how to improve your chances of approval.
Is A Payday Loan Right For You?
Firstly, is a payday loan the best choice for your circumstances? As they are a type of short term loan, they should typically only be used to cover unexpected expenses or financial emergencies. If your situation can be settled through using savings or delaying payment until you are next paid, this can be a better option for your finances overall. Of course, this will depend on whether you have savings to use and if the company the unexpected bill is with is willing to help you.
Also, whilst they are convenient, you need to compare your options and ensure the interest charge on top of the loan amount you need is aligned with your budget. Compare lenders to get a good understanding of what to expect here and find the loan that best matches your needs and affordability.
Eligibility Requirements
Most payday loan lenders will make clear their eligibility requirements. You will usually need to be at least 18 years old and be in employment, either full or part-time with a regular source of income. Different lenders may accept other sources of income such as benefits, pension or self-employment, but you will need to check this.
You will also need to be a UK resident and hold a bank account with a valid debit card as this is where any approved loan funds will be transferred to. Be prepared to provide proof of identity, such as your driving licence or passport, and documentation of your income through your wage slips and bank statements. This will be used to help assess your affordability alongside a credit check, so having these to hand for the lender will speed up the application process.
Finding The Right Lender
When searching for a payday loan lender, prioritise using reputable lenders with transparent terms and flexible repayments. Look for lenders that adhere to Financial Conduct Authority (FCA) regulations and offer reasonable rates and no hidden fees. Check they are FCA authorised, and if you aren’t sure, check the FCA register. Choosing a lender wisely can ensure you avoid any unregulated lenders online and ensure you are treated fairly as a customer.
Application Process & Approval
As the application process for a payday loan is quick, you'll usually be required to fill out a short form with personal and financial information. Some lenders may also ask for documentation at this stage such as your wage slip or bank statements and photo ID to verify your income and identity.
Once you've completed the application, you’ll find out quickly if the lender can help after they have completed a soft search of your credit file. This doesn’t impact your credit rating, so if you were declined at this stage, it won’t impact your score. If they can help you, the lender will do a more thorough review with credit and affordability checks. This is when a hard search of your credit file will be performed that will show on your credit report and your bank statements will be assessed.
If all goes well and the information you’ve provided is accurate and up to date, the lender will hopefully be able to agree to your payday loan the same day. You’ll sign your paperwork online and then the funds can be processed as soon as possible to your bank account.
Repayment Your Payday Loan
Most modern payday loans will allow you to repay in monthly instalments rather than traditionally on your next payday. As you would’ve selected the repayment period at the beginning of your application, all you then need to do is pay on time each month in line with this agreement. For most lenders, this will be done through a Continuous Payment Authority (CPA) which will automatically take payment on your bank account on the stated repayment date.
This is the most common way for repayments to be taken, but some lenders may allow for bank transfers. However, a CPA makes sure that all you have to do is have available funds in your account at least the day before so that you won’t miss repayment.
Get A Payday Loan Without Issue
As long as you can prove your affordability and have all of the required documentation and information the lender requires, you’ll be in a good position for approval on a payday loan. Lenders won’t agree to a loan if it is not sustainable for you, so it’s a good idea to check your finances before applying to double check you can afford it.
If you do have a history of poor credit, this doesn’t necessarily mean you will struggle to get approval. Many lenders can still help if the loan is sustainable and any financial issues you had are in the past. Hopefully, a payday loan can help you when you need it, just be sure it is the right choice for you first.
Author Bio: Kelly is the founder of the Cashfloat blog and has been working tirelessly to produce interesting and informative articles for UK consumers since the blog's creation. Kelly's passion is travelling. She loves her job because she can do it from anywhere in the world! Whether inspiration hits her while sitting on the balcony of a French B&B, or whether she is struck with an idea in a roadside cafe in Moscow, she will always make sure that the idea comes to fruition. Kelly's insights come from her knowledge gained while completing her degree in Economics and Finance as well as from the people she meets around the world. Her motto is: Everyone you meet has something valuable to teach you, so meet as many people as you can!
Author Bio: Kelly is the founder of the Cashfloat blog and has been working tirelessly to produce interesting and informative articles for UK consumers since the blog's creation. Kelly's passion is travelling. She loves her job because she can do it from anywhere in the world! Whether inspiration hits her while sitting on the balcony of a French B&B, or whether she is struck with an idea in a roadside cafe in Moscow, she will always make sure that the idea comes to fruition. Kelly's insights come from her knowledge gained while completing her degree in Economics and Finance as well as from the people she meets around the world. Her motto is: Everyone you meet has something valuable to teach you, so meet as many people as you can!
By Chris Bates
