There may come a time in our lives when we need that extra bit of financial assistance when we’re faced with an unprecedented cost. For example, if your boiler packs up in the middle of winter, or your car breaks down on the way to work. Your income may not always be able to cover this. Payday loans direct can help you manage urgent situations more easily. Read on to find out more about these short-term loans.
What are payday loans?
Payday loans – as the name suggests – are small loans that need to be repaid on the borrower’s next payday. These loans are meant to act as a bridge between paycheques when your income will not stretch to cover any additional expenses. They can be particularly helpful if you need cash quickly, for example, if you’re faced with an emergency expense like a broken-down car, or urgent home repair. Because of the short-term nature of the loan, they come with higher interest rates, so it’s helpful to understand the full terms and conditions before applying. If you do not budget correctly for repayment, you may end up damaging your credit score and falling into financial difficulty.
Who can apply?
Anyone can apply for a payday loan for short-term financial funding; however, they are particularly useful for those who have a low credit score. If you have less than impressive credit from struggling to manage money in the past, you will find approvals more difficult from traditional lenders like banks. Online payday loan lenders have more lenient requirements that allow those with bad credit to access loans even with low credit. They base their approvals on affordability, rather than your credit history – so if you can afford the loan, you are more likely to be approved.
Tips for approval
So, when it comes to getting approved for a payday loan – how can you improve your chances? Here are a few tips:
Get to know your credit score: As mentioned above, your credit score does not pose as much of an issue to online lenders as it would to traditional lenders – you can still get approved. However, knowing your credit score and reflecting on how you could improve before you apply, shows lenders you’re trying to better your financial situation, and you may be able to benefit from favourable interest rates.
Check your report: To improve your credit score to benefit from lower interest, check your credit report and carefully go through the information stated on it. If there are any mistakes, inform your chosen credit bureau to rectify this – you might find that your score automatically improves.
Provide accurate information: Throughout the application process, you may be asked for proof of identity, income, and employment. Make sure you prepare and provide this information as and when needed to make for a smooth approval process.
Tips for repayment
Repayment is an essential part of your loan agreement, and not meeting the expectations of your lender can result in your credit score being depleted and could affect your ability to be approved for a loan in the future. Here are a few tips to help you manage your loan and repay your lender as necessary.
Understand the terms: Before you enter into an agreement, you need to ensure you are aware of the terms and conditions that your lender has set out. Read the small print before applying for your loan to get a clear idea of interest rates, late fees, and any other charges you may be faced with over the course of your loan. If you don’t understand the terms, ask your lender. If they’re still not clear, find another lender.
Prioritise your loan: Make sure you prioritise your payday loan over other, not-as-important payments you may have to pay at the same time. Look at your monthly budget and see if you can free up some cash to go towards paying your loan – you could do this by cutting back on unnecessary expenses. Ensure your payday loan takes priority on your next payday to avoid damaging your credit score.
Avoid rollover: Rolling over your payday loan by paying only the interest and fees and extending the due date can lead to a cycle of debt. This prolongs the life of the loan, as well as cost and incurs additional fees. Paying your debt off outright saves you from falling further into financial difficulty.
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