Here is a roundup of the most frequently asked questions about payday loans. If the answer you are looking for is not listed below, please contact us for more information and we will be happy to help.
What are payday loans?
Payday loans a small, short term financial loans designed specifically to bridge the gap between paydays hence the name. These loans can vary from £100 – £1,000 and are usually repaid over the course of two or three months. These loans are generally called upon in case of emergency such as an unexpected breakdown and resulting cost or unforeseen incidents such as vets or dental bills.
Payday loans are not suitable for other types of financial aid due to the high APR and short duration in comparison with other types of financial assistance. Payday loans are as such best suited to those types of emergency and short term financial needs and offer an easy to use and convenient way to get help when you need it the most.
How do payday loans work?
Payday loans differ from conventional types of finance in that no matter the particulars of the loan, they are always short in duration and there are penalty and default fees for late or missed payments. The Financial Conduct Authority has issued a pricing cap on the amount of charges which can be issued for late or missed payments.
Responsible and fair lenders will always undertake the necessary credit and affordability checks to assess the applicant’s loan suitability, which protects the interests of both lender and borrower. The Loan Ranger may request copies of relevant documents such as proof of income and employment prior to approving any
If successful, applicants will be notified and the money is usually transferred within 60 minutes. Upon receipt of funds, essentially the loan repayment period will begin as agreed in the loan contract. When the loan is repaid in full with the addition of relevant interest and charges, the loan is deemed complete.
What is poor credit?
Every adult who is born of or lives in the UK will have a credit report which houses all of the personal details of your history, any previous loans you may have taken out, any catalogues, store cards, and other types of credit you receive are outlined here along with the repayment history and details of missed payments or possibly defaults
This is used as the chief tool for assessment when considering lending in a credit capacity and most credit brokers and lenders will employ this prior to lending. Your credit report provides indicators to lenders to show whether or not you will have issues repaying or whether you are likely to keep a good repayment history. If you have had problems with money in the past and have a poor credit file, this is likely to impact on the chance of you obtaining funding from any number of sources. Poor credit comes from missed and late repayments and these can stay on your credit report for up to 6 years or more as do County Court Judgements or bankruptcy, Debt Relief Orders etc.
If you cannot meet the repayments, your credit report will show this and damage will be done to your rating which will prevent you obtaining credit in the future.
Who can apply for a payday loan?
Any adult over the age of 18 with a current UK bank account can apply for a payday loan, however not all will be accepted for credit. To be eligible for credit with the Loan Ranger, customers must meet the following criteria:
- Over 18 years of age
- Permanent UK resident
- Employed and take home £750 minimum each month
All credible ad reputable lenders will perform the necessary affordability and credit checks to ensure loan suitability and ability to afford the repayment schedule. If you have a poor credit file you are likely to be rejected.
Are there different types of payday loan?
There are indeed many different types of payday loan available to consumers. The most popular of which are outlined below.
Common payday loan
This is the most common type of payday loan and usually ranges between £50 -£500 with the amount being subject to APR and charges repayable as agreed in the schedule. These loans generally range from one to 35 days in duration.
The instalment payday loan
As the name dictates, this type of loan is similar to the common payday loan with the exception of the duration. This can be anywhere from three to twelve months in duration with payments being staggered, equally over the course of the term. Due to the longer duration, the amount which can be borrowed is usually higher than the common payday loan.
How are payday loans approved?
Fair and responsible lenders will always undertake the necessary credit and affordability checks to ascertain loan suitability. The Loan Ranger also requests documentation to accompany loan applications such as proof of income and employment.
What is APR?
APR stands for Annual Percentage Rate and it is used across financial products as an instrument of interest and fees which your lender may charge for borrowing money. The cost of the loan fee and the interest are calculated and averaged out to give a total yearly fee. It is intended to give an indication of how much you will have to pay overall to borrow money. You can find out more about APR here.