23 Oct What To Consider Before You Apply for a Payday Loan
This kind of short-term loan can be an excellent way to get access to cash quickly and in an efficient manner, enabling you to get money into your account to help with a financial emergency in a minimal amount of time. However, given that a payday loan could last up to 24 months in total, it is vitally important to know how the application process works and what you are applying for. As experts in the loan sector, Badger Loans takes a look at what you need to remember when it comes to a payday loan.
Is it a payday loan for me or another person?
Taking into account the loan partners that Badger Loans works with, we believe the person making the payday loan application should be in your name, and filled out by you only. Doing an application on behalf of someone else should only be in very specific circumstances: such as someone having a medical impairment.
With some loan products, such as guarantor loans, you are however required to apply with the details of one other person – your guarantor.
When you apply for a loan with Badger Loans, it will be necessary for you to give some basic details: this includes your name, date or birth, address, monthly income, expenses and bank details.
How much you would like to borrow?
When deciding on the amount you would like to take out for you payday loan, you should consider very carefully the amount you need. This is because you need to keep in mind that this will also be the same amount you will need to pay back, plus interest.
In order to help you decide, we advise figuring out exactly how much you need to borrow, for things such as immediate expenses or for things like credit card bills or paying for car repairs.
How long should I borrow for?
There is a great deal of flexibility when it comes to payday loans: you can borrow for a period of time ranging from 3 to 24 months.
Nevertheless, it is very important to be aware of the fact that the longer the loan duration, the more expensive it will be overall. This is because interest will be added month after month.
Yet, at the same time, a long term loan may better suit your individual circumstances: as it can provide flexibility and it also means in the short-term you will have smaller repayments.
If you can make early repayments, it is worth doing so: as if you can end up saving money, as less interest accumulates.
Do I meet the initial criteria for a payday loan?
The exact criteria can vary from lender-to-lender, but the general eligibility for a payday loan is usually the following:
- 18 years or over
- UK resident (full-time)
- Stable, regular income
- Valid UK debit account
- Valid UK email
- UK mobile phone account
- Can afford the monthly repayments
If you do not meet certain criteria (for example, you have bad credit) see bad credit loans for more information. This also applies to those applying for CCJ loans, and those with a history of IVAs and bankruptcy.
How am I going to repay my payday loan?
In terms of paying back your payday loan, this is usually in monthly instalments in equal amounts, so that you know exactly what you are paying each month and can budget for it.
You should try to do everything you can to make sure you make prompt repayments: failing to do so means you will incur additional fees, and it can also affect your credit score. If you do have problems with making repayments, it is worth contacting your lender directly as soon as possible so that they can assist you with what to do next.
How are repayments made for a payday loan?
Your payday loan repayments are made through a ‘continuous payment authority’ which works like a direct debit. The lender will tokenise your debit card and collect payments monthly on the date mutually agreed upon.
It is possible to cancel the ‘continuous payment authority’ if you require it, (for example, due to unforeseen circumstances) by contacting the lender directly.