A payday loan can be a useful source of credit on many different levels. While there has been a lot of negative press in the media surrounding payday loans, much of this has been blown out of all proportion and relates to several years ago before regulations were put into place. Today, the payday loan market is highly regulated and rules have been put in place to protect those who obtain a short-term loan. In fact, there are many fantastic reasons as to how a payday loan is more effective than a traditional bank loan. Sure Money UK is going to highlight why a payday loan can actually benefit you.
Ease and speed of availability
Anyone who has ever tried to secure a loan with their bank or building society will understand exactly how long the process can take. If going down this route, you can expect it to take anywhere between several weeks to several months before gaining the approval of the lender. If you are lucky enough to be approved, you will get to enjoy relatively low APR rates. However, the majority of loans provided by banks and building societies are spread out over a period of 1 to 5 years. This means that in the long-term, you may not actually be saving as much as you anticipate. The majority of payday loans, especially those arranged by Sure Money UK are paid back in a period of 1 to 6 months. Yes, the APR is going to be much higher than a traditional bank loan, but as it is paid off much faster, the number of fees that are involved can be relatively low.
A payday loan is also much easier to obtain than a loan from traditional routes.
When you consider that many banks will take up to several months to approve and pay out your loan compared to several hours from a payday loan provider, it is easy to see which is more beneficial for the individual. Typically, when people apply for a loan, they are looking for money there and then. If you have to wait several weeks or months to receive it, you may find yourself and more financial difficulty than you expected. Payday loans are ideal for those in an emergency situation who need quick access to finance without too much hassle.
Affordable short-term loans
Another great thing about a payday loan is its affordability. As noted above, the APR may be much higher than traditional lenders, but a payday loan is a short-term loan designed to be paid back quickly. There are no hidden fees or charges to worry about and if you make your payments on time it can actually work out to be more affordable than other avenues. For some, a maximum of 6 months may seem like a short amount of time to pay back the borrowed amount, but if it allows you the breathing space that you need to sort your finances out, six months is actually more than enough time. After all, who wants to be in debt to their bank year after year?
Perfect for those with poor credit
The majority of payday loans are available for every type of credit situation, be it poor credit or excellent credit. Of course, your current credit situation will have an impact on the APR that you pay each month and which types of providers will accept you. However, having bad credit will not prevent you from obtaining a short-term loan in itself. What is even better is that if you keep to your repayments and clear the balance on time, you can actually improve your overall credit score which will make it easier to obtain credit in the future.
Can be used for whatever you want them for
When you go to your bank to arrange a loan, it can sometimes feel like you are being subjected to an inquisition. Every aspect of your financial situation will be investigated in depth, and more often than not, the reason as to why you want to take out a loan will be the determining factor. A payday loan provider may ask what the loan is for but this will not be the final deciding factor. In fact, for the most part, disclosing what the short-term loan is for is purely for statistical purposes only. Regardless as to whether you want a payday loan to treat yourself to something you would like or to pay an overdue bill, the deciding factor on your approval is your ability to repay the amount that you borrow.