There may be times, when you needed cash in hand to cater to your emergencies, but have run out of it. In such situations, borrowing funds can be handy. You could either borrow money from your friends and family, or from banks and financial institutes.
Borrowing from banks and financial institutes makes a lot of sense, as you will not face any personal conflicts if you fail to repay the borrowed amount on time. There are many types of short term loans that you can opt for, as per your needs. Nevertheless, payday loans are the most chosen loans in the UK. Such a loan can ensure that you need for urgent cash is easily fulfilled as soon as possible.
When you apply for a payday loan, you need to ensure that you are fully aware of its terms and condition. Big lenders like LoanPig make sure that their customers are fully aware of all the types of loans they offer and related terms and conditions. You could learn more about LoanPig by visiting their website.
Things you need to know about Payday loans
How it works?
The payday loans work based on 2 things:
- Annual Percentage Rate (APR)
- Duration of loan
Based on APR and the total duration of loan, the total loan burden can vary. As an example, £500 with say at 1,500% APR will generate £500 of interest in more than 3 months. However, the same will be just £130 for the period less than a month without reducing APR.
What is the interest rate?
As per the Small Loan Laws, the typical APR will be somewhere between 30% and 40%. Therefore, by taking the above example, for single month you will end up paying £16 for a loan of £500 which may be little lower than credit card too.
Can you obtain payday loan anywhere in the UK?
Most of the payday loan providers offer their services from their websites. Therefore, you should not have any problem procuring payday loans from anywhere in the UK. You will need to fill up your basic information on their website. Most of the companies provide approvals within 24 hours itself.
How you should use payday loans properly
If you want to avoid getting trapped by interest rates of payday loan, it is important to properly understand the following.
- Payday loans are not meant for long-term solution.
- You must avail this loan only when no balance is left on your account. You should avoid borrowing the cash unless you fall under following 3 situations:
- You are broke
- You have no other alternative
- You can afford it
Benefits of the payday loans
By reading all the above, you must be thinking why to get entangled with such payday loans and their interest rates at all? However, these payday loans also offer few advantages too.
- It is an unsecured loan and no collateral is needed for such deal.
- Due to tighter regulations, applicants are now better protected against scam. The interest rates of payday loans are now capped, so, there is no chance of bankruptcy.
- This loan is more easily accessible than any other options.
Earlier only banks used to provide loans and control finances of people which is no longer the case. If you require a payday loan, just apply for it and you will get it.