Payday lending in the UK is a potentially easy way to get out of a financial emergency if you have experienced unexpected costs and bills that your regular salary and income cannot cover.
Some people may only need to borrow £400 or perhaps even £1,000, but the ability to borrow money as you need it can help in a big way.
Payday loans in the UK, used correctly, can be a financial lifesaver for many people in times of need. For example, if you have a car insurance bill or a utility bill that you were not expecting to have this month, payday lenders may allow you to borrow money quickly.
This form of borrowing, often referred to as ‘high-cost, short-term borrowing,’ is not for everyone. These loans, including instalment loans and bad credit loans, can all potentially pose a risk to people that do not repay their loans on time, damaging their credit scores and making it harder to borrow money in the future. Nevertheless, they certainly also have advantages.
Payday loans are relatively easy to access and quick to receive. If you are accepted, some lenders can fund the loan in as little as one business day.
Easy To Access
One of the biggest advantages of UK payday loans is that they are easy and quick to access for many UK customers, so long as you meet the eligibility and lending criteria that lenders require.
It is important that you check the eligibility criteria for loans as they may vary from lender to lender. Also, you should only ever apply for loans, be they payday loans or otherwise, that you will be able to afford.
You can apply for payday loans online in just a few minutes and sometimes receive the money in as little as one business day. This is often what people are looking for when they want short-term loans, and payday lending can provide this for borrowers in the UK.
Fewer Requirements
Many borrowers are interested in and attracted to payday loans because the requirements to receive a payday loan are often less strict than traditional loans. Additionally, with less stringent requirements, the application process can be quicker.
In some cases, lenders may also be willing to work with self-employed, poor credit, or low-income applicants. However, before applying, it is best to check with the lender whether they accept such applicants.
That said, lenders will still require proof of income and credit when you apply for a payday loan. Keep in mind that failure to keep up with your requirements, like your monthly repayments, can have a very negative effect on your credit score and ability to borrow money in the future.
You May Get Approved with Bad Credit
Unlike many other types of loans in the UK, you may be approved for a payday loan without having a good credit score. Some lenders may consider income alongside credit score when determining an applicant’s eligibility.
Although you may have to pay a higher interest rate on your loan if you have bad credit, payday lending may still be available for those with damaged credit scores.
Payday Loans Are Unsecured
One of the biggest advantages of payday lending in the UK is that these loans are unsecured. This means that you do not need to provide collateral, such as your home or car title, to secure the loan. As a result, your property is not at risk of being repossessed.
Most other loans will require you to stake your car, property, or another asset against the loan. What this does mean, however, is that if you do not make your repayments on time and if you fail to repay the loan, your credit score will be damaged, and you may end up with a county court judgment (CCJ) and be taken to court.
However, payday lending in the UK being unsecured by nature allows you the peace of mind that none of your possessions are being put up as security for the loan when you borrow money.
Cooling Off Periods
In the UK, there is a 14-day cooling-off period between all types of loans. This means that you are entitled to cancel your loan within the first 14 days of the agreement if you change your mind and realise that you may not be able to afford repayments.
If you decide to change your mind, then you will have to repay the loan and any interest that has been accrued, but the lender will pay back any fees.
