There are a few myths associated with the perceived cost of taking out a payday loan and hopefully, this article will clear a few of them up!

With standard high street loans, the APR with a payday loan is almost irrelevant. Yes, we know the consumer police will be running to the nearest CFA office to report this article for misleading financial statements, but it’s true! The APR is meaningless due to the fact that most short-term payday loans will only run for around 30 days. Because an APR is calculated based on the length of the agreement, it is absolutely meaningless to compare the APR for a 5 year personal loan from the TSB at 7.9% with the 1737% APR quoted by most payday loan lenders.

How much interest do Payday Loan providers charge?

Our research has shown that virtually all the online payday loan providers charge exactly the same to lend you money, which is currently a flat rate of 25%. Compare this with the average rate of interest on personal loans, which is around 7% flat, and you can now see the difference in these types of loan products. Basically, due to the very short duration of a payday loans (around 30 days), the APR cannot realistically be compared.

What really matters is how much you will be charged to borrow an amount of money over a given period of time!

Most payday loan companies will charge you £25 for every £100 you borrow from them, assuming that you repay the loan within 30 days, or by your agreed next pay date. That’s a flat rate of interest of 25% which is expensive, however it’s nowhere near as expensive as using an unauthorised overdraft from your bank.

Forget the APR if you are looking to secure a short-term loan quickly as in many cases the need for the cash will be greater than the need to secure a low APR rate! If you are looking for the quickest way to get some cash to cover a financial emergency, a payday loan comparison site will help you secure the best rate!

Like most financial products, payday loans are a necessity not a luxury! If you need cash quickly, your bank and Credit Card Company may not be the best place to go! Don’t forget, banks are renowned for portraying themselves as competitive loan providers, when in fact for many of us; it can be the most expensive way to borrow money!

Credit cards are also a very expensive way of raising cash as many charge extortionate rates of interest of cash advances. Borrowing money on your credit card can also affect your credit rating as your profile will show that you have used your credit card to withdraw cash – something that most people would not really consider!

As the market has expanded, there are a few payday loan providers, such as QuickQuid, that process loans within 10 minutes of approval, seven days a week.

Most payday loan Companies will process your loan within 30 minutes of receiving your online application; however there will be a cut off period for same day fund transfers. Most Companies will need to process your loan application before 14:30 in order to guarantee same day funding. After this time, a money transfer will take place on the next working day. Keep in mind that some providers will not be able to transfer cash at weekend, so make sure you check before applying if you need the cash on a weekend.

How much money can you borrow?

The amount of money that you can borrow using a payday loan can vary. Typically, loans range from £80 up to £750 for UK residents. In some cases, repeat customers may be offered a higher amount of up to £1500.  This is standard practice amongst Payday Loan providers. Basically, your loan amount will increase once you have cleared your first loan. Like other forms of finance, completing your agreement and paying off each loan on time will improve your credit history.

 What happens if you need to extend a Payday Loan repayment period?

Like all loans, if you are having problems paying you must contact your loan Company as soon as possible. Loan extensions may be granted at the discretion of the loan provider. In all cases, if a loan extension is granted, original loan finance charges will usually need to be paid first on the original due dates. You will then be contracted to for an additional loan, where you will be charged additional finance charges. Payday loan extensions are usually governed by your pay dates.

Payday loan extensions can usually be requested until 17:00 weekdays, and should be made three days (excluding weekends) before your original loan expires.

Will you need a bank debit card to take out a payday loan?

Most payday loan providers will want you to pay your loan off using a bank debit card; however most will arrange some form of direct debit in the event that you do not have a debit card.

Why Payday Loan Companies need your debit card information!

Loan Companies will use your debit card information to automatically debit your account in order to pay off your loan on the specified date. If your bank declines the payment due to insufficient funds, the payment will be re-presented.

How soon can you apply for another loan?

The fastest way to obtain a new payday loan is usually by paying your loan off by debit card! Once you have paid off your existing loan and you pay by debit card, your payment will clear in a matter of seconds. Once your payment has cleared you can then apply for a new loan immediately. In most cases, most payday loan providers will arrange funding of a new loan into your bank account on the same day.

Can you pay off your payday loan early?

Yes, all payday loan providers should allow you to pay off your loan early; after all there risk is then completely eradicated. All you should need to do is contact your loan provider by phone or email. Some payday loan Companies will provide you with a rebate of interest charges if you pay off your loan within 14 days of the original funding date.

How many payday loans can you take out at the same time?

Payday loans can only be provided one at a time and you cannot take out multiple loans. If you already have a loan, you must pay it off before applying for a new payday loan. In most cases you can request a loan extension instead of a new loan and the finance charges will be the same for either an extension or a new payday loan.

How will a Payday Loan affect your credit score?

As long as you make all your payments on time, taking out a payday loan will actually have a positive effect on your credit rating. Credit reference agencies will be informed of your timely repayments, which will improve your credit score. However, like all other forms of finance, if you fail to repay on time your credit score could be damaged.

If you have a poor credit rating at present, making regular payments on a payday loan could be a good way for you to start to improve your credit payment profile in the future.

What if you have a bad credit history?

If you have less than perfect credit history you can still apply for a payday loan. The decision to lend to you is not based on the long term like a traditional loan. Payday Loan Companies are only interested in your current circumstances and your ability to repay the loan over a very short period of time. Repaying your payday loan in a timely manner can help to build up your positive credit history going forward!

When we’re desperate and have an urgent need of some ready cash, payday loans can provide a quick solution to short-term cash problems. An instant solution to getting back on track or not!  Here are a few reasons why this type of loan should always be a last resort.

If you’re contemplating out a payday loan, you most probably have a poor credit history. You may think it’s the only way you’ll be able to get the cash you need. So why are they eager to provide the loan?

Apart from the money they earn from the interest charged it’s practically guaranteed they’ll get their money back. While the loan may be easy to come by you still need to be cautious and make sure that you can repay the loan by your next payday.

When you apply for a cash advance payday loan, most of the time you don’t even need to provide any documentation or fax any id. To qualify, you will need to be in full time employment and earn a minimum of around £600 per month, have a current bank account and a debit card

Interest rates on payday loans are typically high due to the short-term loan cycle! Typically on average you will pay around £25 in interest charges for every £100 borrowed.

When you’re strapped for ready cash, there are other alternatives so long as you don’t wait until the last minute.

If you recognize at least a couple of weeks in advance that you’ll be in a predicament where money is concerned, there are other ways you can raise cash! You could go to a car boot sale, hold a garage sale, or sell all your unwanted items on eBay! You may perhaps be astonished to discover that you’ve got lots of articles you either don’t use or need.

Clothes, toys and gadgets are fast sellers on eBay and at car boot garage sales. If you own gold jewellery or diamonds, take them to a pawn shop and add that cash to your growing fund. Pawn shops generally charge 10% interest and you have three months to redeem your goods. You could also see if you can secure an advance on your pay … sure, it’ll be deducted from your next pay, but you won’t pay any interest! You can also ask relatives if they might loan you some money on a short-term arrangement.

If you have tried all of the above and still need a solution to your short-term cash needs, a payday loan can still be a sensible option, provided that you repay the loan before your next payday and avoid any extensions that are usually offered by the loan provider.