Finance: Everything You Need To Know About A Payday Loan
There could be a time when you might need a bit of extra money to support you whilst you wait for your next payday. As a result, a Payday Loan can take away some of the stress and pressure that is associated with living wage slip to wage slip, ensuring you can provide yourself and your family with everything you need. With that in mind, here is a quick guide containing everything you need to know about a payday loan.
What exactly is a payday loan?
To put it simply, a payday loan is a short-term loan that is designed to tide you over until your next payday. As a result, people tend to loan smaller amounts of money so that they can cover important costs, such as transport fees and bills, and continue living their life as normal. As with any loan, you will have to pay a certain amount of interest on the money that you borrow, but there are plenty of deals online that make taking out a payday loan worthwhile and relatively easy to pay back.
Who is eligible for a loan?
Thankfully, many people are eligible for Payday loans. For example, to qualify for the loans offered by WageMe, you need to be:
Over 18 years old
Employed (Full-time or part-time, with a minimum salary of £600 PCM)
An owner of a UK bank account.
Living at a UK address.
A UK resident
What can I use a payday loan for?
There are many reasons as to why people take out payday loans, whether they be in response to an emergency or to support them in paying bills. However, common uses of payday loan funds include:
Emergency car repair
Transport fees (i.e. needing to use public transport due to car breakdown)
Unexpected debt (loss of a loved one, funeral costs, etc)
Support when paying bills (Gas, electric, water, etc)
How do I get approved for a loan?
If you meet the above eligibility, then it is not too difficult to get approved for a loan. Usually, you will have to complete an online survey which will determine whether or not you are suitable for a loan. This survey will ask numerous questions regarding your employer, your wage, your taxes, and any outgoing bills you pay every month. They will also factor in costs such as the amount of money you spend on food and drink, utilities, and transport. Though the questions may seem invasive, they are designed to help the payday lender get a better understanding of your personal needs - as no two people require the same loan for the same reasons.
How much money can you loan?
The amount of money you can loan depends on the company you loan from. For example, WageMe offers loan amounts from as little as £50- £5000+. You should be careful to ensure that you do not request more money than you need. The loan is to support you whilst you work to get more money together, and you should try not to be too reliant upon it. During this time, you should try and adapt to good saving and spending practices and try to keep a tighter hold of your budget. Perhaps you can spend some time considering how to grow your savings.
How do you pay the money back?
Over time, you will be given the opportunity to pay back your loan in increments that are suited to your current financial situation. However, the longer you take to pay back the higher amount you will pay in interest. If you pay all of your frees early, you may be able to forgo interest rates altogether. Be sure to pay close attention to your repayment plan and stick to it as closely as possible.