Payday loans can be useful tools to giving you a helping hand in your personal finances. It is important to remember that they should only be used in the short term because of the higher interest rate than bank-backed loan products such as personal loans. In this guide, you will learn how to use a payday loan from the first step to the last.
2. What is a payday loan?
A payday loan, also known as an instant loan, is a short term loan from a consumer finance institution. When you look for payday loans, you should only choose them from licensed companies who are vetted with a Consumer Credit License. Payday loans can range from £100 and upwards from that.
3. Qualification criteria
- To be eligible for a payday loan, you need to see if you pass some of the qualifiers below:
- Have a fixed address: Lenders need to know that you have a safe and stable address.
- Have a bank account: You should have a bank account that you can administer online or in your branch. IT should be enabled with direct debits so that your lender can take your repayment on the due date.
- Be at least 18 years old or more: It is critical to be of legal age because you apply for payday loans.
5. Data Protection
Legislated under the Data Protection Act of 1998, this means that your lender’s website is required to state that they adhere to the law and explain details about how they will use your data from your application. This can be found in the terms and conditions section of the website or a data protection section if your lender has one.
6. Understand the terms of your loan
The terms and conditions of your payday loan will decide how you repay your payday loan and other factors. Before you fill out the application form, read the terms and conditions which should be on a lender’s website. Peachy Loans features a detailed terms and conditions section which highlights the responsible lending aspect of the company. All terms and conditions sections will explain what is expected of you if you are accepted for a loan which will include repayment terms.
7. How to fill out the form
The application for your payday loan is the key to getting the loan that you need. Peachy Loans feature forms that are easy to fill out and understand. Anytime a loan application becomes difficult and cumbersome, this is where you need to look for a responsible lender that has created the form with clear English and guidelines.
- First know how much you want to borrow – this is known by looking at your income and your expenses and factoring in the interest rates that you will pay on the amount that you have borrowed. Input the amount you want to borrow as long as you can afford to repay the loan.
- The next step tends to be filling out information about yourself such as your name, title, date of birth and your mobile phone number. This is important information so that the lender has a profile about you in terms of your loan.
- The third step should be information about your address and your employment. This helps the lender assess if you are a credible applicant who can afford to repay the loan. Your application form will also have a field about bank accounts that you need to fill in so that the loan can be paid into your account.
- Finally to verify the application form, you will be required to accept the terms and conditions of applying for the loan. This can be done through ticking the option on the form or submitting the form through.
8. Loan Calculators
One of the most interesting innovations in the payday loan industry has been the inclusion of loan calculators. These help borrowers to assess how much they can borrow, the interest they will pay on the loan and when this repayment is due. Loan calculators should be used by all potential borrowers and Peachy Loans facilitates customers by including one on its website.
9. Multiple Repayments
Responsible lenders in the payday loan industry are responding to customer feedback to make it easier to repay a payday loan. One way that this is being done is through multiple repayments. At its core, multiple repayments allow you to spread the repayments that you are due to make.
The advantages of multiple repayments include there is less financial stress that is involved in paying back your loan. Another benefit of repaying several times is that you won’t be hit by hidden fees which can happen with other lenders. Multiple repayments will clearly state how much you will end up paying in interest.
10. How to use the money responsibly
Payday loans are only the short term; if you need a loan for the longer term, you should contact your bank or personal finance professional to advise you. Once the lender has debited the loan to your account, you are free to use the cash. Use these top tips on how to use the money properly:
- Use them for emergencies: If there is an emergency in your household, use the payday loan to cover this until you are paid from your job.
- For illnesses: When you are sick, it is important to take care of your health. This is a good example of when to use a payday loan if you don’t have the cash up front or medical insurance.
- Manage the amount in your spreadsheet: Account for every penny and pound in a spreadsheet to see how you are using the payday loan. By watching the breakdown of how it is used, you can use the money responsibly and see the trends of your personal finances as well.
- From the amount you want to borrow to filling out the form and receiving the funds, applying for a payday loan has never been easier thanks to informed tips and guidance from Peachy Loans. Sit in the driver’s seat of your personal finances by understanding how to make payday loans work for you.
Have a Peachy Day!