UK payday lenders such as Wonga never seem to be out of the news, and it’s normally for all the wrong reasons. However the growing rise in popularity of payday loans in the UK, affirms the need for this type of convenient short term finance product in the current economic climate. We take a look at the much maligned payday loans UK residents have at their disposal.
There’ll never be a right time for an emergency
We all know that things always go wrong at a time when it is the most difficult to sort them out and when it’s least convenient. So often these emergencies involve the outlay of substantial cash amounts, and if payday is still two to three weeks away, it can be difficult, or even impossible, to make the monthly budget stretch. So, if you haven’t got a rich Uncle Bob then what are your options?
The bank that likes to say
If you are in a good job with regular salary payments your bank might, just might if you speak to them very nicely, and take out one of their expensive premium accounts, offer you an overdraft “facility”. If you are offered one, always check the fine print very carefully before using that facility because it could also cost your very dear!
The way that overdrafts often work is on a fee per day basis. So, although the overdraft may be labelled and truthfully described as “interest free” you will find that there is a daily fee applicable for using it. In the case of Halifax Bank, part of the Royal Bank of Scotland group, Which magazine reported that to use one of their arranged overdrafts would cost you a daily fee of at least one pound, and often much more.
So if you used your overdraft towards the beginning of your pay period and kept it in place for, say, twenty five days, you would pay twenty five pounds in fees. The problem with this is, if you let it run for a little longer than initially expected then you would keep paying one pound per day until you put your account back into the black again. As “Which” magazine pointed out, that rate of “interest” is higher than that charged by most payday loan companies and, if the overdraft goes over its pre-arranged limit, which it could easily do without you realising, the rate, in the case of the Halifax, goes up to five pounds a day – which is a phenomenally expensive way to borrow money!
To be fair to the banks of course, they would never suggest such an arrangement as being ideal for anything more than a day or two but it goes to show that, when the opportunity arises, they are not averse to charging such fees for the facility if you choose to use it. Luckily, there is an alternative – and it’s payday loans UK borrowers have to thank.
When it comes to obtaining payday loans, UK borrowers are well placed to get the funds they need in an emergency
When it comes to payday loans, UK banks are permanently closed. They don’t do them, and probably never will. Why should they? They already have another far more effective product to wrench your hard earned cash from you should you happen to encounter cash-flow problems in the form of their unauthorised overdraft. Instead, there are specialist payday lenders that provide the instant payday loans UK customers turn to for their short-term cash-flow fixes – and turn to them they do – demonstrated by the very significant growth in the use of payday loans UK wide over the past few years.
The main USP (unique selling point) of a payday loan is that it is specifically designed to provide fast access to funds for a short period of time, usually a month or two, but payday loans up to 12 months can also be found. Other notable features include a fully automated application process (online loans), fast approval and same day cash. In the main, it does what it says on the tin, and does the job very well. It’s a fixed agreement so the borrower knows exactly where he or she stands – that’s simply how much it will cost and the date it needs to be repaid. Loan repayments are collected automatically from your bank account after your salary is paid in, so provided you stick to your part of the deal, it should all run like clockwork and you won’t need to worry about missing the payment and having to pay late payment fees.
For payday loans, UK borrowers have the added peace of mind, that payday lenders, and other intermediaries, such as brokers, are fully licensed and regulated by the Financial Conduct Authority, so if there are any problems, and a complaint needs to be made, there is a clear path for redress.
The availability of payday loans in the UK is not a problem – if you don’t have a payday lender on your local high street (I would be surprised if you haven’t), don’t worry, there are plenty of payday lenders that operate online. Just remember, if you are searching for payday loans online, to search for “payday loans UK”, just to remove any possibility of getting non UK payday loans providers in your results.
So there you have it – convenience, visibility, accountability – inherent properties of payday loans UK borrowers can rely on – and not properties you would readily associate with traditional banks. So what are you waiting for?