Pay day loans ? 5 things to know

Posted by AngeloEverton on September 20th, 2011

It is all so nice getting a pay day loan but are you aware of what it is all about? People take pay day loans and then don’t handle it properly because they are completely unaware of what these loans are all about. To put it shortly, a payday loan is a short term loan. You take a loan at the start of the month and the lender takes the money back on your next payday. This is how it works. Before you rush off to apply for one of these loans, take a look at the five points mentioned below and you should be mostly aware of these loans.

Eligibility

Not everyone can apply for a pay day loan. There are three qualifying criteria. The first criterion is that you should be at least 18 years of age. The second qualifying criterion is that you should be a resident of the United Kingdom. The third and final criterion is that you should have a regular income to show. If you fulfill all these three criteria then you can apply for pay day loans.

Application process

Most of the modern providers of pay day loans have an online application process. So, you need to visit their website and fill up the online form. The online form asks for your personal details, your income details and your bank account details. Filling up the form takes 10 minutes at the most. Once you submit the form your pay day loan gets approved almost instantly.

Amount of loan and interest

When you apply for a pay day loan for the first time, the maximum amount you can expect is between Ł80 and Ł200. You shouldn’t expect more than this because you will not get any. However, when you pay off your first loan on time, you become eligible for the next loan of a higher amount. Pay day loans typically have a much bigger rate of interest when you compare with a regular bank loan. However, you don’t feel robbed because the loan gets over on your next payday. For a Ł100 loan you need to pay back Ł130 on your next payday.

Credit rating

Are you worried that you won’t get a pay day loan because of your negative credit rating? Don’t worry about that because most providers of pay day loans service those customers that have this problem. Apply for a loan online and you can almost rest assured that your loan will be approved.

Extension

It is important that you don’t default on your pay day loan payoff. However, there are times when you know you will not have enough money in your account on the payoff date. What you need to do is inform the lender so that they debit your account for the interest accrued. The loan principal gets moved to the next payday as a new pay day loan.

Keep these five points about pay day loans in mind and you shouldn’t have any issue getting a pay day loan and handling it well.

A pay day loan sounds really nice. However, keep certain points in mind about pay day loans and this is when you find it easier to get a loan and manage it well.