The pay day loan is a prosperous industry in the UK. This type of credit against your paycheck is easily available with absolutely no check on your credit history. If used carefully, the loan can be of great help to the borrower in times of emergency.
Benefits of a Pay Day Loan
To overcome a short-term financial crisis, UK residents resort to a pay day loan which you can easily obtain even if you have a bad credit score. Sometimes referred to as cash advances or deferred deposits, the loans are available instantly if you are employed and receive a regular monthly income. By just filling in personal details on an online form, your loan will be approved. The minimum and maximum loan varies from company to company; generally, it is between 50 to 1000 pounds which has to be repaid within a month or so. It’s a quick way of obtaining cash without facing the embarrassment of asking family or friends. Another advantage is that you can use the loan to perk up your bad credit score; this, in turn will help you get approval for mortgages and credit cards from banks for future use.
Plan Well Before Approaching a Lender
Before you approach a pay day loan lender, take some prudent decisions. Firstly, take the loan only if you are in dire need of cash. Never take a loan for a holiday. You should check out several providers and consider the offers. Understand and review the lender’s APR well. Never borrow an amount which is beyond your means of repayment. Always repay the loan on the due date; delaying will only complicate your financial problems. It will result in having multiple loans; if in such a situation, a debt or budgeting advice is recommended. Never overstate your income thinking that you will get a bigger loan; it will affect your repayment schedules and your financial future.
New Regulations for UK Pay Day Lender
Amendments are on the anvil for new rules that will restrict the UK pay day loan lender from taking advantage of vulnerable customers. Currently, there is no limit on the APR that the lenders can charge. But, when the new regulations come into force, lenders would have to freeze the rate of interest for borrowers who are facing financial crisis and would also limit a loan rollover. Borrowers would be given a minimum period of one month to repay the loan. Lenders have agreed to give details of charges and fees on the borrowed amount. The Bill came up because the ‘OFT or Office of Fair Trading’ discovered that lenders were charging very high interest rates on the loans.