It can be quite a daunting task when applying for a Payday Loan, with many different lenders promising different deals on interest rates, borrowing terms and repayment dates. We have come up with a number of points that first time borrowers need to look out for when making a decision on which lender to apply with.
Payday loans are still a relatively new way of borrowing for many people. Although there are huge amounts of people that choose payday loans over other borrowing solutions, only a small percentage of those have actually applied/taken out a payday loan previously.
Payday Loans for first time borrowers
When shopping around for a payday loan there are a number of things that you will need to take into consideration to ensure that whatever the lender is offering you, is best suited to your current financial situation. For example if you only need to borrow a small amount of money for a very specific amount of time, shop around a number of lenders until a lender can match your requirements. Remember, you should always be in the driving seat when it comes to a payday loan, if a lender can not give you your desired amount of money or borrowing periods then you are under no obligation to accept this offer.
Here are our top points to look out for:
APR and Interest Rates – Always take a note of the current APR and interest rates in offer. There are many lenders that offer a huge range of interest rates ranging from 200% all the way to over 1000%! It is vital that you try and find a lender with the lowest possible interest rates to ensure that you don’t end up paying over the odds in your repayments. Being accepted for a payday loan will feel great and you will be tempted to accept it there and then, however always look at the total amount that you will be paying back before agreeing any contract. Total amount repayable examples are visible on every lenders home page, this basically gives an example of how much you will be expected to pay back when borrowing certain amounts of money and will give you a clear indication as to whether you will be able to afford it.
Borrowing Terms and Conditions – You should always look at the implications involved when missing a payment, does this have an effect on your credit score? Will you be charged a higher interest rate? Always read the small print in the terms and conditions section of a lenders website.
Length of borrowing terms – If you only need to borrow for a specific amount of time, in order to save repaying unnecessary interest rates you should try to find a lender who can offer you the exact borrowing terms that you want. For example if you need to borrow £100 until you next payday in 2 weeks time but the lender is only offering a borrowing period of 10 days, this is not going to work for you and you may struggle to make the repayments which may have other implications.
Responsible Lending Policy – Every lender should have a responsible lending policy in place, for example here at Paydaypixie.co.uk we believe that if a payday loan is not necessarily the most suitable option for you, we will always provide you with alternative advice and guidance on other financial solutions that may be better suited to your needs. Many payday loan lenders have previously been fined by the Financial Conduct Authority for offering loans to people who simply would not be able to afford the repayments of a loan which can put the customer in further financial difficulty.
FCA Authorization Number – Every UK lender needs to be approved by the UK financial governing body the FCA. Any lender who has not been issued with a FCA authorization number is not permitted to offer any form of finance to UK customers. Helpful Tip – You can find a lenders FCA authorization number at the footer of their website, scroll down and take a look at ours! If you feel that a payday lender is operating illegally, you should contact the FCA/ Financial Ombudsman to voice your concerns.
Secure Site – Always make sure that your personal information is protected. If you have any concerns regarding a website or something just doesn’t quite feel right, always follow your gut instinct and apply with a more well known brand. You can always check for reviews and other customer experiences online regarding any specific lender.
By following our step by step guide we hope that you find the payday loan application process a little less daunting than usual! If you have any questions regarding our application process or payday loans, please don’t hesitate to contact a member of our team by emailing us directly email@example.com