A 2020 Guide To Payday Loans
2020 has so far been full of unexpected occurrences for everybody. Therefore, we never really know what’s around the corner. Unexpected bills and debts are quite common, especially when we are least wanting them to happen. Therefore, why not educate yourself on one of the things you which can help you out in emergencies, payday loans.
Payday loans were being borrowed and repaid hundreds of years ago. Although, according to a 2007 study by economist Michael A. Stegman, payday loan firms were extremely rare prior to the 1990s, but have grown substantially since then.
What are payday loans?
A payday loan is a small sum of money which you borrowed from a direct lender and repay from your next wage packet. Payday loan differs from the traditional short-term loan in a number of ways. Usually, You can borrow from £100 all the way to £1500, this way you are able to borrow enough money for emergencies and not have to worry about repayments months down the line.
How do I get a payday loan?
Traditionally, to borrow a loan, the process would take weeks or even months. This is because banks and lenders would need you to apply via the post. This meant they had to one by one read everybody applications and deal with the process manually. But, nowadays, the process is done online and you could even get your loan on the same day. With the help of fast technology, you enter your details into an application form on the website and then your request will be reviewed. This saves time for not on the customers but also the lenders themselves.
Payday loan regulations
Previously, lenders must have had a license from the UK Office of Fair Trading. This was due to the consumer credit act 1974. This was to offer consumer credit. The consumer credit act of 2006 required the Office of Fair Trading to consider irresponsible lending. Although, since this, the Office of Fair Trading has since passed its responsibilities to the Financial Conduct Authority also known as the FCA. The FCA is the principal trade association which represents the interests of loan providers operating in the UK. They regulate the lenders to ensure that they are doing everything correctly, along with work to make the industry fair, effective and honest.
What are the requirements for payday loans?
Here at BingoLoans, our criteria is as follows:
- Be over 18 years old & a UK resident
- Have a bank account and an active debit card
- Be in permanent employment or receiving various allowances
- Meet our credit and affordability criteria.
- Agree to provide accurate information about yourself and your financial situation
What is the interest rate for payday loans?
The cost of payday loans is capped by law, under rules made by the Financial Conduct Authority (FCA).
Representative example: Borrow £300 over 3 months @ 292% pa (fixed) Total repayment: £457.95 in 3 monthly payments of £152.65. Representative 1261% APR.
Loan duration 1-12 months and fixed APR 292%
Any late payment will affect your credit score poorly. If the loan is not repaid then a default may be registered with a credit reference agency. This will affect your credit score and will be seen by other financial institutes when you apply for any type of credit, insurance, mobile contracts, etc. For advice visit the Money Advice Service.
If you are interested in applying for a payday loan, click here.