The payday loan industry is growing quickly within the UK as it successfully fills a market gap in the lending arena. It is now along with high street banks, credit cards and other mainstream lenders a top choice of many consumers looking to apply for finance.
When choosing a payday loan lender, there are a number of considerations to make as to whether it is the best product for your needs.
Why do you need the loan?
The industry is set up to offer short term, accessible funding for emergency situations, so the first question to answer is what the loan is actually needed for. If it is for a new car, a holiday, major home renovations or any other considered spend situation, then a payday loan is probably not the solution. If however, funds are needed in an emergency for perhaps car repairs for a failed MOT or a breakdown on the side of the road then this kind of finance could be the best option.
Are you able to repay on time?
One of the benefits of a payday loan is that as soon as it is approved, the money is very quickly deposited into the nominated bank account. This means that the customer can access the loan swiftly to resolve the situation which has arisen. On application, a repayment date is required so although the money is quickly available, there has to be the guarantee that it will be paid back on a set date. If there is the possibility that this may not happen due to continued lack of funds, a payday loan may not be the best option as there could be high charges added to the account.
Will you meet the criteria?
Loans are available to a wide range of customers, whether employed by a company or self-employed. If the latter, this kind of finance can be a useful bridging tool if awaiting payment from a client for goods or services provided. As long as the loan can be repaid on the due date, lenders are willing to consider those who run their own businesses just as much as someone who receives a regular salary from their employer.
Common uses of a payday loan
Other uses for a payday loan could include broken down central heating, unexpected extra bills when moving home – for example paying for a telephone line to be activated – or the need to pay an extra high gas or electricity bill during the winter months.
If it’s the best solution for you
It’s important to look at all aspects of how a payday loan works before committing to taking one on as part of the family finances. They are short term solutions with high interest costs, but if used wisely can help in a number of otherwise difficult situations. If the amount required falls within the lending criteria of the loan company and the repayment is made on the due date, there is every opportunity to develop a positive relationship with a payday lender. This means that if in the future there is another emergency, there is help on hand when needed to give speedy assistance with the unexpected events in life and the customer can relax knowing they are on their way to resolving a crisis.