A payday loan is a popular choice to get access to money quick. Which are the options you can choose from if you need money fast? And what are the things to pay attention to?
There are many payday loan lenders in the UK. There is at least twenty or thirty known providers of these fast access loans. Some bigger players are even active with multiple brand names, creating the false idea that you have a choice between different offers.
How payday loans work
Payday loan providers transfer the requested loan to your bank account often within a day. The loan repayment, plus the interest or the extra fee is taken directly from your bank account on the due date.
“The typical charge is about £25 per month for every £100 borrowed. Advertised interest rates (APRs) are typically around 1,750%.” (source)
According to Wikipedia, most payday loan lenders charge quite a lot of money: 25% for an advance repayable at the end of the month.
A few charge 30%, which is equivalent to an APR of over 2000%. If you keep failing to repay your payday loan, this enormous APR could become a reality in a few months.
Risky Payday Loans
These pay-day loans are not risk free. The costs are high and many people get stuck for not being able to repay the loans. They often start hopping from one short-term loan provider to another.
Many payday loan providers are also known for aggressive marketing and other tricks they may use to make people use their services. They screen adds not only to people looking for loans but also advertise on tv and on billboards, to trick people with little cash to opt for a payday loan. These adds often do not inform you of real costs.
Costs Payday Loans
Payday loan lenders often advertise with false information. Most people look for the interest cost, but many times these costs are low or even non-existent. The real cost come as a “service-fee”, for paying out your loans fast, even instantly. Or they come with high costs if you’re overdue with repaying the loans.
You can find payday loan providers online, but there are also many lenders with actual shops where you can get cash in your hands straight away. You need to sign some papers and most likely bring some sort of identifaction, proof of address as well as some prove of income. They will inform you in some way of the cost of the fast loans, but they will probably not inform you more than what you will ask for.
Popularity of Payday Loans
Payday loans are very popular nevertheless. According to Wikipedia in one year “1.2 million people took out 4.1 million loans”. That’s almost 2 out of 100 persons in the UK.”