It goes without saying that many of us need a helping hand with finances from time to time, and since their arrival in the UK around eight years ago, payday loans have become one of those helping hands.
Although just like with all financial products, including overdrafts, credit cards, guarantor loans, unsecured and secured loans, payday loans aren’t for free, and require a great level of care when obtaining.
Thoroughly vetting your finances and having a clear understanding of what you can and cannot afford is crucial before applying for any form of credit.
The fact is, this credit is for you, so you have to do some of the legwork. When assessing your application, a lender will refer you to their underwriting team who will conduct some basic checks on you.
These checks can include your credit history, whether you’re registered on the electoral roll and your current and previous employment situation. That being said, they are not always able to gather every possible piece of information about you when deciding if you are a safe risk or not.
This is why it is up to you to assess whether a payday loan, or any other form of credit, is an affordable option for you before applying.
Are there cheaper alternatives to an overdraft, credit card or payday loan? Are you able to bridge the gap by borrowing money off a friend or family member? If this is not the case, then a payday loan or similar product may be beneficial.
All payday loan lenders and brokers are required by law to display all relevant and important information to you before you decide to apply. This includes the total cost of credit, and a representative example, which gives you an idea as to what you may have to pay back should your application be successful.
In addition to this clear information, payday loan lenders and brokers are required to link you to important and impartial advice services such as the Money Advice Service.
Before applying, ensure you have a full insight into your financial situation, and that you thoroughly read all the information a payday loan lender or broker will provide you prior to making your application.