Life can throw curveballs, and when you’re not prepared for them, they can have an impact on your finances. You never know when you’re going to be faced with a broken boiler, a medical bill, or an urgent home repair – but what happens if you’re not prepared? This is where payday loans direct lenders can help. These loans can be used to help you when your income won’t stretch to cover an emergency. Read on as we take a closer look at what payday loans are, how they can help with unexpected costs, and factors to consider before you apply.
What is a payday loan?
Payday loans are a type of short-term loan paid back on the borrower’s next payday. These loans tend to be available in small amounts, typically under £500. Payday loans are offered by a range of online lenders, with various requirements and loan terms to suit the borrower. These loans are also available to those with bad credit, as lenders tend to focus on affordability rather than credit score and how the borrower has managed their money in the past. These loans come with additional interest charges and fees which will be determined depending on the lender.
The benefits of using payday loans in an emergency
So, what are the advantages that come with choosing a payday loan over other types of finance? Let’s take a closer look:
- Convenient: Applying for payday loans is convenient for the borrower as it doesn’t require you to head into a bank or physical premises. You can apply for payday loans online from the comfort of your own home in a few simple steps.
- Fast Approval: Traditional lenders like banks and even online brokers can take longer to process your loan and deposit your money. However, if you’re dealing with an emergency, timing is crucial. Online lenders can review and approve your application in as little as 24 hours, with funds arriving in your account quickly.
- Lenient Requirements: Online lenders are not as strict when it comes to requirements as you might find with traditional lenders. For example, if you were applying for a personal loan with a bank, you would need a healthy credit score for your application to be approved. Even if you have less-than-perfect credit, online payday loan lenders can offer you funds when you need them most.
Factors to consider before applying
Whilst payday loans can be an option for those that are faced with an unprecedented cost, like a broken boiler, or urgent home repair, there are a few factors to keep in mind before you apply, such as:
- Alternatives: Before you enter into a loan agreement, make sure you’ve looked at other options that could be helpful. This could include asking family and friends for help, checking credit card rates, or getting help from a credit union. Payday loans can be expensive and should only be used if necessary.
- Credit score: Make sure you check your credit score before applying for a payday loan. If your score is low, you’ll be subject to higher interest rates. It’s always beneficial to improve your score before applying for finance, as you’ll be able to take advantage of more affordable interest rates.
- Lender’s reputation: Make sure you don’t settle for the first lender you choose. Shop around not only to find the best deal but to ensure your lender is trustworthy and reputable. Check reviews from other borrowers to find out more about what to expect – choose a lender that offers quality customer service.
Payday loans can be an option if you need funds quickly and you have nowhere else to turn. Whilst these loans can be helpful, they can also be expensive – so make sure you do your research before you enter into an agreement.