With the financial squeeze tightening its stranglehold on families all around the UK, an increasing number of consumers are deciding to get a payday loan.
This type of credit is not suitable for long-term borrowing, however it is helpful as a way to obtain money for urgent situations and to help you make it through until payday.
Nonetheless, there are a large number of loan providers in the market and it can be challenging to choose which lender to approach. Although there may be many suitable matches for every person, it's worth taking a few key points into account.
The first thing to consider is naturally the cost. Some firms give you a far lower interest rate than others and this will probably be one of the most important aspects looked at. Yet it's worth checking the agreement very carefully as some loan companies, which may look like the most competitive, hide how much they cost amongst a range of other fees which are not instantly evident.
The amount you want to borrow and how quickly you need it are two additional factors that will have a bearing on what loan provider you apply to. Even though many companies in the payday lending market provide a fast processing time, some take a little longer to evaluate your application when you first apply. This is not necessarily a bad thing, quite the opposite but if you are in a hurry for your money, some payday lenders will be able to handle your application faster than others.
If you know that you will need to make use of payday loans again sometime soon, it might be worth signing up with a loan company that provides an SMS loan. This kind of borrowing, also referred to as a text loan, is like a mobile overdraft - it's pre-approved and you can use the cash when you need it. After you have registered and received a personal identification number, should you wish to borrow money, you just text the amount and the funds are transferred to your bank account in a few minutes.
This can be as useful as having a credit card but the loan periods are generally quite short and with a low cap on the amount you can be lent.
All payday loan lenders must be registered with the Office of Fair Trading. With lots of firms having been told to stop trading because of unethical practices, it is always a good idea to make sure that the lending company still holds a valid Consumer Credit Licence.
You may well plan to repay your loan when you get your next salary, but what happens if you cannot afford it? And how about if you wish to pay it back early? A loan provider that offers flexibility and does not impose excessively high fees if you need to extend the term of your financing can be another useful thing to consider.
To be able to pay back your loan you will have to give the payday lender either your debit card or bank account details. This kind of information should never be given out lightly so in case you have any concerns about the integrity of the company you have chosen, cancel the application without handing over your private information. There are lots of other lenders you can use instead and security should always be your highest priority.