As payday loans are not offered by traditional banks, it is often the case that people do not know how they work. It is important tough, to have a good understanding of all types of loans because it will help you to be able to decide which loan will be best for you when you need to borrow money. There are lots of different loans and getting the right one is important because it means that we get better value for money from the loan if we get the one that suits us the best. Also, we might have requirements, such as needing a certain amount of money, that not all loans will be able to fulfil. Therefore, it is wise to find out how payday loans work.
How Much Can I Borrow?
A payday lender will often offer borrowers between £100 and £1,000. This is a fairly small amount compared to some lenders but it can be handy to know that there is a lender that will let you have manageable amounts that are not too daunting with regards to repaying them. It is worth noting though that if you are a first time borrower you may not be able to borrow too much. This is because lenders will not do a credit check and so they will need to build up trust with customers in other ways. They will therefore just lend them a few hundred pounds to start with and if they pay that back successfully, they will then be happy to lend them a higher amount of money.
How Long do I Borrow for?
A payday loan will not last for long. The idea of the loan is that you have some money to keep you going until you next get paid and therefore you will have to repay the money on your next pay day. This could mean that you will only borrow the money for a few weeks or even just for a few days. This can be really handy for those people that do not like being in debt as it will not last for very long.
How Quickly Can it be Arranged?
As payday loans are designed to help put in emergencies, then they are often arranged very quickly. There are some lenders that will get you the money within a few hours of applying. This will vary between lenders though and so if you do need the money really quickly, you will need to check with the lender to see how long they take in order to make sure that you will get the money on time. There are also some lenders that will be open all of the time, so at weekend sand overnight and that can be handy if you need money at those times. Not all will offer this though so again it is something that you will need to check out before deciding on the specific lender that you are going to choose.
How Much Does it Cost?
A payday loan can be more expensive than some other types of borrowing. This is because they will lend to people who have had financial problems in the past and are therefore taking a risk. The people they lend to are more likely to not be able to afford to repay the bad credit payday loan and therefore they charge everyone a bit more money so that they can cover the costs of those that do not repay. As with everything that you buy, you will need to think about whether you feel that the loan with offer you good value for money and this will depend on how urgent your need is for the money.