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Why is Payday Loan a Preferred Choice Despite its High Cost?

payday loan

It is very common to require a short-term unsecured loan at one time or other to manage the unexpected financial emergencies and expenses. The numerous types of short-term unsecured loans in the UK are available at online loan stores but Payday loan is the best-known unsecured short-term personal borrowing choice in the UK; these are widely used as the part of financial planning strategy as well as the most dependable financial help for any objective. Basically, these credits are designed just for 28 days or up to the next salary day but some direct lenders provide payday loan for longer periods also.

Nine Prime Benefits of Short-Term Salary Day Loan:

  1. Most legal UK resident borrowers are over 18 years’ age so they are eligible. The borrower must have proof of regular income.
  2. A bad or poor credit score is not an automatic disqualifying barrier. It is highly stressful & disheartening to see the loan application rejected automatically because of poor credit score. The numbers of direct lenders with online presence offer online payday loans even for longer than the standard period.
  3. Salary day loan is an ideal choice to deal with temporary short-term budgeting hiccups. Whether you need immediate finance for paying an unexpected bill or for upfront purchase, the salary day loan is a perfect choice.
  4. You don’t make long-term commitments. The personal loan locks you into the several months’ responsibility of paying monthly instalments. Because of being the short-term credit, it is easier to plan for complete pay off with the least possibility of failure and paying late payment charge.
  5. Contacting different lenders one after the other is a time-consuming task. The most of FCA authorised direct lenders in the UK deal in loans against salary; therefore, just a single click lands you at numerous prestigious loan stores ranking good in search results.
  6. The online process gives you the freedom to choose the lender all across the UK; your location doesn’t matter. The fast process is simple and doesn’t need hard copies of documents. Just fill up the simple details and get the best quote within minutes.
  7. Because of the thick presence of direct lenders in the UK’s private lending marketplace, you always have the power to negotiate even if you hold a bad credit record. You can get multiple tailor-made proposals within less than half an hour to compare for choosing the best. The loan amount is credited to a bank account by the next day.
  8. Payday loan industry is regulated by FCA since 2014; since then, the industry has gone massive transformation process to deliver better. Every deal from the FCA registered direct lender is genuine and reasonably priced.
  9. If you pay back payday loan on the time without fail, it builds your credit history reducing the bad impression of a past credit report. It may be a good tactic to improve the credit score but the too frequent borrowing delivers a negative impact on your credit score report.

The Cost of PayDay Loan:

The Payday lenders in the UK usually charge a processing fee instead of interest rate. For example, a £100 payday debt for 28 days may have a fee around £20, so, you will £120. According to the latest FCA regulations, no borrower will pay more than £24 in fees for 28 days loan against salary. The default fee is also capped as £15 plus interest on the due amount. FCA protects the borrower for paying more than twice of borrowed money. Some direct lenders dealing in mortgaged loans take the payday loan as the borrower’s disqualification.

Some direct lenders, dealing in small amount payday loans, don’t share the details with credit reference agencies; these lenders often advertise for “no credit check payday loans” but charge more. A short-term personal loan may be an alternative to payday loan but if you need small amount just for 15-20 days, salary day loan is a better choice as it lets you free from paying liability at the earliest.

Concluding Note:  

Taking a payday loan is not a big affair but affording its high cost that is often charged on daily basis is a challenge. The dealing with FCA authorised lenders are always cheaper besides having the advantage of protection against possible failure. With its only disadvantage of high cost, it is still the preferred choice of an employed community having a poor credit score.

 

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