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September 27, 2020

Payday loans have gained popularity over the years despite facing backlash and criticism from lawmakers and financial advisers over their strict terms. Some of the factors that make these loans popular are fast processing times that offer a quick solution to financial emergencies.

Payday lenders do not give much thought to the borrower’s credit history and are highly sought after by individuals with poor credit scores and those without an existing credit history. The major point of contention with payday loan providers is the interest rate. Some payday loan providers have taken the cue and created fair loan products to practice responsible lending.

However, critics must remember that the borrowers are not complaining. As with any other loan, it is possible to default. Borrowers understand that loan repayment requires discipline and commitment. Payday loans are quick loans that empower borrowers who may not qualify for loans from big banks to cater to unforeseen expenses such as medical emergencies and automobile repair expenses.

Pros of Payday Loans

Payday loans play a significant role in helping borrowers meet their financial obligations. Part of the reason why they remain popular is the various benefits they provide to their consumers. Here are some advantages of payday loans.

  1. Easy Application Process-Online application means you do not have to go to the Creditor’s office, saving you time and money.
  2. Small amounts-Payday loans are usually small amounts because they are repaid in a single payment from the borrower’s next paycheck.
  3. Don’t Check Credit Scores-All that you require to get a payday loan is a bank account, proof of employment, and identification documents. Unlike regular bank loans, poor credit history is not a concern with payday loans.
  4. Short Repayment Period-Your payday loan is paid off by your net paycheck. This means that the maximum repayment period is one month.
  5. High-Interest Rate-Some payday loan providers charge interests of up to 400 % per annum.
  6. Quick Processing Time-Payday loans are quickly disbursed to your account as soon as they are approved.

Considerations to Make for Payday Loans UK

If you opt for a payday loan in the UK, chances are that you have a poor credit score. This means that big lenders consider giving you a loan as a high-risk event.  While these loans are convenient and easy to acquire, ensure that you can repay the loan on time to get the most value.

Remember that deferred payments will lead to penalties and increase the repayment amount, making it difficult to clear your loan. Payday loan providers are in business and will take necessary measures to ensure their loans are repaid, including taking legal action.

Successful repayment of your loans will build your credit score and keep you in control of your finances. Likewise, defaulting negatively impacts your credit score and may lock you out of all financing options.

As a borrower, take your time to research these loans before applying and avoid taking up loans for non-essential reasons such as parties or vacations. If you put your money into good use, you will not regret taking these short term loans.

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