Payday loans are very popular in the UK, but if you don’t understand how they work, you can end up in financial difficulty. They are different than other loans in many ways, although they do have similarities too. Before you get a payday loan or look into getting an online cash loan, here are some of the most popular questions which arise about this subject.
What is a payday loan?
A payday loan has been given the term ‘payday’ simply because it’s a loan which you take out and pay back to the lender when your next payday arrives. If you’re about to incur costly fees with your bank for not paying back your overdraft on time, a payday loan could help you to get rid of these fees. You can borrow a short term loan, pay off the overdraft and then pay back the payday loan when you’re next paid.
Who is eligible for payday loans?
Not everybody is eligible to get a payday loan; however, the criteria are really quite simple. Due to legal requirements, you must be at least 18 years of age. You need to have a bank account of some sort to which the money can be paid into, and you must be able to prove that you have a job which is paying you.
Are credit scores checked?
Unless almost every other type of loan, payday loans don’t rely on your credit score. Your credit rating won’t even be checked when you apply for the loan, so it doesn’t matter how good or bad your credit is. This is one of the reasons why payday loans are so popular, since people in financial difficulty who cannot take out a credit loan or other loan can easily get payday loans.
What if the loan isn’t repaid on time?
Many lenders will allow you to extend the time that you have to pay back your loan, although you often need to contact them in order to let them know the change in circumstances. You could also incur extra fees by not paying the loan back on the date agreed (usually your next payday), so make sure that you’re completely clear about this before you decide to change the due date.
Is there a limit to the number of payday loans you can take out?
In theory, there is no limit to how many payday loans you can take out, although taking out more than one at any given time can really get you into financial difficulty. Remember that payday loans are only meant to serve as a short term solution to your financial problems, and taking out more than one could leave you with debt that you can’t afford to pay back. It’s advisable that you only take out one loan at a time, but remember that you can always take out a payday loan the next month – just make sure you’ve paid back the first one before applying for another.