The COVID 19 pandemic had a major impact on businesses around the world, leading to a loss of income and revenue by millions of people. If you’re like most people, you probably crossed into the New Year thinking about ways you could regain your financial footing. Same-day payday loans offer a viable solution for people seeking temporary financial assistance.
The economic crisis that came with the 2020 COVID pandemic meant that people from all walks of life were affected. Almost every business felt the strain of having commercial activities grind to a halt, making financial aid like traditional loans and salary advances hard to acquire. Payday loan companies in the UK have tried to fill the gap left by institutions like banks and credit unions.
What is a payday loan?
A payday loan is a short term loan that is taken against your expected income. The loan is available to all UK residents above the age of 18 and with valid proof of income. The average amount involved with payday loans in the UK is £260, with most borrowers repaying the debt in under a month. Once a payday loan is approved, the money is sent directly to your account.
Most payday loans involve small amounts between $50 and £100, but some lenders can offer more significant amounts upon request. Larger loans can also involve scheduled payments, instead of a one-time deposit on the due date. The amount you’re able to borrow will largely depend on your level of income.
Why should I take out a payday loan?
There are many reasons why you should consider taking out a payday loan if you need some funding to tide you over until the end of the month. Since 2015, the payday lending industry has experienced multiple developments, with stricter regulation implemented by the Financial Conduct Authority (FCA). Some factors that might encourage you to consider a payday loan include:
The FCA has your back
One of the major worries behind payday loans was the lack of regulation available in the sector. Lenders initially had free reign over matters like the interest rates they could charge their customers. The FCA has put a stop to their rule and has implemented policies and regulations that every lender is expected to adhere to.
As part of the regulations implemented six years ago, daily interest rates have been capped at 0.8% and defaulting penalty fees cannot be above £15 plus interest accrued on loan. Lenders are also not allowed to charge their customers more than double the loan amount for their services. If you borrow £250, for instance, the final amount owed cannot surpass £500.
Since the implementation of stricter regulations by the FCA in 2015, borrowers now have the opportunity to hold lending companies accountable for mis-selling their products. Groups like Citizen Advice have also taken an interest in payday lending, requesting the authorities to shut down up to four lending companies because of their unethical practices.
You don’t need collateral to take out a payday loan
One of the main problems related to loans from traditional institutions like banks is the need for collateral for people with bad credit. If you don’t own any property, stock or valid assets like a car, getting a secured loan is hard to accomplish. Payday loans don’t require any security with their loans, with the agreement based on the premise of trust and proven expected revenue.
Proof of income doesn’t always have to be in the form of a paycheck. Lenders will accept any form of documented record that proves you have a steady source of revenue.
Other documents that can work as proof of income include tax returns, pension schemes, and bank statements. As long as you can prove that you have a reliable source of revenue to cover your loan expenses, you can qualify for an application.
Payday loans base their operations on time-sensitive responses
If you’re applying for a payday loan, you likely need the amount requested sooner rather than later. Numerous online payday lenders feature minimal time frames with application approvals and money transfers. Many lenders offer same-day approval and transfers, allowing borrowers to get the money they need in just a few hours.
Traditional banks can take up to a week to approve your loan request, requiring you to jump through numerous hoops to get the money you need.
The processes involved with the loan applications can also be lengthy and complicated, making them extremely time-consuming for first-time applicants. Online payday loan applications involve straightforward and concise forms that require very little information.
According to research conducted by CMC, payday loan borrowers came from different professional fields, including teachers, policemen, company managers and web developers. The wide array of professionals that have used payday loans proves that they’re something that anybody can put to good use.