What is a Payday Loan?
They are a loan that one takes out when they are low on funds and expect to be able to repay it when they get their next pay cheque, hence the term "payday loan". They have also been called short term loans, personal loans and no credit check loans.
Personal loans are small package loans that are borrowed for short term and personal usage. It is usually used for situations that need immediate financial solution such as tuition fee payment, medical emergencies, home renovations, avail electronics and gadgets, vacations, wedding, other domestic expenses, and payment of other debt such as credit card debt. The loans are not secure and do not require any collateral; however, approval of loan from https://www.paydayloansnow.co.uk/ is more difficult since the application process is more stringent.
Banks and other lenders would require documents that would prove the capability of borrower to pay back the debt such as credit ratings, income and the person’s credit history. Approval usually takes around one to two weeks. Interest rates vary from 6% to 36%, where people with better credit rating usually get a lower interest rate.
It is relatively higher compared to loans that require assets as collateral such as car loan and house loan. Loan caps, however, vary from bank to bank. Payment terms also depend on what is offered by banks, where loans can be paid for 6, 12, 24 months or longer. Shorter payment periods may mean larger monthly payment dues, but the interest rate usually goes lower.
Since the loan is not secured, no assets may be taken from the borrower upon failure to pay the owed money from the bank. Banks and lending companies report negligent borrowers to credit bureaus, thus affecting the borrowers’ credit rating and narrowing their chances of having other loans approved in the future.
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