Payday Lender Interest Rate in the United Kingdom
Like all other countries, payday loan firms have attained a very strong position in the United Kingdom as well. However, with the passage of time, people are getting a feel of the reality as well. High interest charges are becoming a very hard task for the loan applicants to manage.
Loan applicants are not aware of these rates when they apply for these finances. Some companies are even charging interest rates at three hundred percent. It is obvious that payday loan firms apply a high rate as compared to banks because the amounts are much smaller.
However, an interest rate of three hundred percent is simply unmanageable. A lot of people have criticized this practice due to which an interest cap has been applied in some localities of United Kingdom. Once you apply for the loan and the amount gets transferred in your account, you have to pay the interest charges under all conditions.
The interest rates rise to even further limits if the payments are not made on time. This increase is not small and you can even witness a wise of hundred percent. It is obvious that if you have taken a loan of one thousand pounds and interest is applied at the rate of two hundred percent, you would be paying more than the principal amount.
One way to handle this problem is to discuss everything about the interest charges in advance. In this way, you would know about the rate of extra charges. Even if these rates are low, try to your payday loans on time.
In addition to that, there is one thing which every loan applicant should avoid. Do not take payday loans from multiple companies at a time. Every company has its own interest rates. In addition to that, the payment deadlines vary. Hence, it is quite hard for the loan taker to manage.
Reasons for Receiving a Cash Advance
In my opinion, cash advances can be received for any purpose if you run out of cash during a pay period. This is a very common problem for some individuals. Most of us plan our budget before we get our salary pay check. This helps us in controlling our expenses and purchase rates.
However, our budget would only include the expenses which are expected. What can be done about sudden costs? For instance, a car issue or an unexpected expense arises which was not planned in advance. It is hard to manage these situations.
It is obvious that you cannot wait to get the money in such circumstances. To receive the money without any delay, you can get hold of cash through a payday advance lender. Try to select a lender which is highly rated or appears to be popular by referrals, etc.
Once you have selected the provider, you need to complete the short online application process. In addition to that, you need to decide the amount of cash which needs to be taken out. If you need £80.00, do not apply for the maximum loan limit. You should remember that the interest amount increases with the loan amount.
Your interest charges will increase if your loan sum is three hundred pounds instead of eighty pounds. Hence, your loan sum should be according to your requirements. Apart from medical purposes, people also take cash advances when they want to buy an expensive branded commodity and they do not have the required sum in their account.
In addition to that, people do not like using their savings for any kind of leisure. An example can be a beach trip. You can take a cash advance loan to buy air tickets. Similarly, getting your house painted or renovated in any manner can also be termed as an example.
Cash Advances are Less Cumbersome Than Bank Loans
It is a fact that cash advances have their share of negative factors. Even after these negative factors, a lot of people prefer them. In addition to that, the numbers of applications are increasing with the passage of each day. Payday loan companies are aware of this fact. In addition to that, they are aware of the fact that they have a much easier process as compared to banks.
However, in my opinion, the two options cannot be compared with each other. Payday loans are an example of short term assistance. On the other hand, bank loans stretch for a time period of three to five years or even more. The advantage of cash advances over bank loans is that the loan applicant does not need to provide any justification.
Cash advance companies do not demand a reason from the loan takers. They can get the money for almost anything. In addition to that, there is no paperwork. However, banks do not follow such an easy process. There is a proper set of paperwork which needs to be filled by the applicant. He needs to submit collateral to be considered.
If the bank does not recover its dues, the collateral of the customer is liquidated. Banks also have an edge over cash advance companies. There is a very apparent difference in the interest rates of the two financial solutions. Payday loan companies charge a very high interest rate.
In most cases it is above seventy percent. This does not seem a problem for the loan taker when he sends an application. However, the problem begins when the interest payments have to be made. The situation turns from bad to worse when the due date passes away. People who make late payments land into a lot of financial complications due to the additional interest charges.
Choosing the Right Company for Payday Loans
Have you searched ever for payday loan companies on the internet? When you search for these companies through an engine, several web links are displayed to you. Cash advances are taken for urgent purposes. Thus, the loan applicant cannot spend a lot of time in choosing payday loan firms.
There are some good tips which can prove to be very helpful in this relation. Let’s have a look at these tips. The experience of the cash advance company is highly important. In my opinion, new companies are not very reliable and they do not use a very professional approach.
You should remember that once you have finalized a company, you have to pay the loan sum along with the interest charges. Hence, make sure that you are making the right selection. The second factor which needs to be considered is the payment duration. Initially, when you are applying for a loan, the repayment process seems quite easy.
However, the trouble starts when the due date is round the corner. On an average scale, the allotted time period to clear payday loans is two weeks. This time period increases and decreases according to the loan amount and interest charges. Usually, when the interest charges are low, the time period is low as well.
As the cash advance company is earning smaller profits, the time period to pay the loans is less as well. If you think that you would not be able to clear your account in the given time period, you should look for other options.
Another key factor which is important for the selection of the cash advance company is the number of loan applications. You can also ask your friends and colleagues for better suggestions. People who have attained good cash advance deals can help you. This is better than testing a new company and taking a risk.