Payday loans are easy and convenient to obtain and can be a lifesaver when people run into unforeseen expenses or financial emergencies. A payday loan is a short-term loan that aims to lend the borrower a small amount to repay upon receiving their income or benefits.
Here is what it takes to get a payday loan:
Fortunately, people have the option of applying for a payday loan online and do not need to visit payday lenders’ storefronts, which have been useful during COVID-19 restrictions. Online lenders make the application process straightforward and easy to complete. There are not that many supporting documents required. Most customers have their money within a matter of hours instead of days.
Clients who utilize online lenders’ services also have a better range of companies to choose from. When you are limited to visiting a physical location to secure a payday loan, choices between service providers are limited. In such a fiercely competitive market, lenders offer different interest rates, and it is worthwhile to shop around online to find the best one.
Meet basic criteria
Lenders have loan criteria that applicants must meet before they even receive consideration. These include the lender’s age as a company cannot enter a loan contract with a minor.
Other criteria include a UK bank account and mobile number. Lenders deposit the loan amount directly into a bank account. If a lender offers you cash, consider this a red flag as this is a practice commonly used by loan sharks. The lender needs your mobile phone number to reach you, especially if you do not repay your loan. You also need to be a UK citizen to qualify for a payday loan from a British lender.
Have supporting documents
A lending company will likely ask you to prove that you meet the criteria mentioned above. Evidence of your identity is essential to a lender as it minimizes the chances of fraudulent transactions. You can use your passport to show that you are of age and a UK resident.
Online lenders ask for a mobile number and email address and will use authentication processes to ensure they are yours. For example, they might text a code to your mobile or email it to you. You need to enter on the website, which gives the lender proof that these contact methods are legitimate.
Lenders are typically responsive and will get back to you about an application within a matter of minutes. Showing a similar approach could also act in your favor. Have the requisite documents scanned and ready so that you can upload or email them as needed.
Meet affordability criteria
Payday lenders need to know that you can afford to repay any loan they extend to you. Therefore, they want to see proof of your income. This could take the form of salary advice slips or a bank statement proving your monthly benefits income.
Some lenders might go as far as asking about other financial commitments to determine that, after expenditures on essentials, you still have enough income remaining to repay the loan.
The lender is taking a risk by extending an unsecured loan and wants reassurance that there is a reasonable probability of you repaying your loan. Cut your budget to the bone when entering these figures to show that you have the money to satisfy a debt such as a payday loan.
Other lenders might not ask that many questions about affordability, being satisfied with proof of income. However, working out a budget and determining your ability to pay should be something you do for yourself before taking out a loan, even if the lender does not request it. You will feel more confident about taking a loan, secure in the knowledge that it is affordable.
Keep the loan amount realistic
If you find yourself in a financial pickle, work out exactly how much money you need to borrow to sort it out. Then subtract any amount you have at your disposal to calculate an exact loan amount. A smaller loan means less interest, so it is your advantage to borrow only what is necessary. Do not be tempted to borrow more money to deal with other financial matters that can wait.
Keeping the loan amount to a bare minimum is also an excellent way to ensure you are approved. Lower amounts are more likely to gain favor with the lender. They are more affordable, which will get you through the affordability check. Sometimes, the difference between approval and rejection could be as little as £30 in the amount requested.
Short-term loans have higher interest rates attached to them because they are unsecured. Lowering how much you request could significantly reduce the repayment amount.
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