People who are in desperate need of cash may seek loans from banks and lending institutions. Having the ability to borrow some money in a financial emergency can be a peace of mind for those with low incomes.
What some people don’t understand is that these companies ask for rates depending on the type of loan is being borrowed. Interest rates differ each time you apply for borrowed money. One good example is when you are taking out payday loans, which can be pretty expensive here in the United Kingdom. Whoever your lender is – you’ll likely find the interest rates higher than the rest of other loans in the market because of the following:
1) It’s instant cash
Obviously, payday loans are instant cash. This is why it is the ideal type of loan for those who are urgently looking for money. For that reason, lenders have the right to top it up with high-interest rates. This has become so popular because it’s straightforward and simple. Other types of loans don’t have this kind of flexibility so, if you are applying for a payday loan, except that the interest could be significant.
2) Some loans are paid out within an hour of approval
Most payday loans are deposited straight to your bank account after approval. That’s what makes it more convenient if you compare it to other loans available in the market. To put it simply you are paying for the rush. Banks and lending companies don’t do this often. Loans are typically mailed as checks after a month or deposited to your account a week after you passed the credit assessment. But since you are willing to pay for 300-400% APR, these financial institutions guarantee to give you the money you need in an hour.
3) You can apply online 24/7
Another feature of payday loans that make it expensive is its availability. Even if you go to a bank or a lending shop, you can proceed to the process of application immediately. There is someone available to assist you anytime so you can avail it faster. Even outside office hours, loan staff is more than willing to be at your service. And in doing so, they get higher payments. This is proof that lending companies are balancing the cost out.
4) Your bad credit might not be an issue
Find a loan when you’ve got a poor credit history isn’t always easy, especially when you’re applying to your bank or building society. When applying for a loan and being rejected there can be a further negative impact on your credit file.
There are a number of new comparison sites on the market that can help match users with lenders that will have a high likelihood of acceptance, avoiding a hard credit search which could affect your credit score. Some of the comparison sites such as Badcreditsite.co.uk compare lenders that are willing to lend to individuals with troubled credit histories.
Getting a payday loan is a personal decision. There isn’t a right or wrong answer to whether it is the right type for you. If you think you need cash as soon as possible and you want your bad credit to be discarded, then this could be ideal for you.