At some point in life, you may find yourself stuck in an emergency situation where you need a few hundred pounds to make your way out. In such a situation, a payday loan is a great option that is worth considering. Be it house renovations, car repairs, medical emergencies, special occasions, sudden travel expenses, unforeseen cash shortages, or a delayed salary, you can opt for payday loans whenever you need urgent cash.
If this is the first time you are reading about payday loans, here is a quick overview to help you understand what these loans entail.
- Short term loans that have a payback period of 7 to 30 days
- Small sized that allows you to get urgent cash ranging from £100 to £1,000
- You can have them transferred in your bank account on the same day, even in a few hours.
- You don’t need to provide any sort of guarantee, pledge, or collateral as they fall under the category of unsecured loans.
Eligibility Criteria for a Payday Loan
Payday loans are quite different from traditional cash credits or bank loans. The eligibility criteria are quite broad and widely inclusive. In order for you to qualify for a payday loan, you must:
- Be 18 years or older
- Be a citizen of the United Kingdom
- Be employed or have a steady source of income
- Have a valid bank account, email, and working phone
It doesn’t matter if you are an immigrant, a benefits recipient, a retiree, or a single parent; as long as you fulfil the above criteria, you qualify for payday loans.
Does the Credit Score Matter?
In some cases, it does, but in most cases, it doesn’t. In order to determine your ability to pay back the loan, some lenders run credit checks and may be reluctant to give you loan if you have a bad credit score. The credit score is based on how consistently and timely you paid the different forms of credit in the past like credit cards, utility bills, phones bills, and other loans. Indeed, having a good credit score has its perks, and if your credit score is good enough, the lenders will readily approve your payday loan application.
On the other hand, most lenders that are offering payday loans don’t run credit checks and base their decision on things like previous loan history, age, income stability, and employment. So even if you have bad credit score, you can still get a payday loan.
Important Points for Payday Loans
There are a few things that you should keep in mind before you decide to opt for payday loans. They are:
- If you default on payday loan for any reason whatsoever, it will badly affect your credit score.
- Since payday loans are short-term loans, they have high interest rates
- Never use these loans for paying off other debts.
- If you find it difficult to pay back a payday loan, you should consult a professional debt advisor.