Comparison Between a Quick Payday Loan and Conventional Loan

A quick payday loan for the UK consumers does not need any additional introduction these days, as most of the people in UK are using this service for catering their unforeseen emergency financial crisis. It is a very easy and simple stand-by solution for any kind of small cash shortage at any given time, as you can get an instant payday loan online and once approved you would get the money into your bank account the same day. Short term payday loans have some significant differences compare to any other loan and in some cases it serves way better than a traditional loans from the bank.

Traditional Loan and a Quick Payday Loan Comparison

A traditional loan is provided by conventional banks and requires aplenty documents and a good expiation for obtaining a loan. When you apply for a traditional loan the financial institute would be required to go through your credit history and you have possess a good credit record to be eligible for taking a traditional loan. Sometimes the bank asks for your employment history and might refuse your loan application if you have not been with the same employer more than one year. On top of these you have to appear at the bank or the financial institution and have to go through a bunch of paperwork just to apply for the loan. On the other hand, cash advance payday loans are provided by rather unconventional financial establishment whom are known as the direct lenders. Most of these direct lenders maintains their operations online and the borrowers can get short term payday loans from anywhere with a smart communication device with internet access. The eligibility requirements from the direct lenders for short term payday loans are remarkably flexible compare to a traditional loan. If you are an 18 years old UK resident with a steady income going into your bank account then you are eligible to get short term payday loans. The best feature of a quick payday loan is that most of the time it is provided in small amount and for a short period of time so you would not get spiraled into a long term debt.

Although a payday loan has much higher interest rate compare to a traditional loan, but taking in account the other factors, to get an instant payday loan is much better than a traditional loan in the time of financial emergency.

Payday loans in the United Kingdom | Compare and Find the Cheapest Cash Advance Service Provider

Payday loans in the United Kingdom are short term loans for struggling residents to meet their needs until their payday. This revolutionary financial rescue idea was first adopted in the United States of America. In the recent past, short term cash advance service is going through a steep rise in the United Kingdom as more and more average income individuals/families are vying to get approvals to get payday loans. Like any scenario of supply and demand, with the rising demand of these loans the suppliers/lenders are increasing as well. The largest leading lender in the United Kingdom is the Dollar Financial Group. There are many such lenders, who offer short term loan services like The Money Shop, Express Finance, PayDay UK, Wonga, Paydays Lead, Credit on Demand and many others.

Government Regulations for Payday Loans in the UK

The payday loan industry in the United Kingdom generated revenue of approximately 250 million pounds in 2009, which saw 2.2 billion pounds increase in 2012. The National Debtline received over 20,000 calls from payday loan clients, with query to get out of payday loans, which confirm the stark increase in demand. Although beneficial to the industry, the borrowers are struggling to make ends meet with and/or without these loans. Most borrowers are unable to seek benefit in the long run as they are unaware of the general financial knowledge for the proper use of cash advance services. The Financial Conduct Authority (FCA) is responsible for the regulation of cash advances. The government has become more active in its regulations due to rising criticism of payday loan services. It is responsible to ensure that the lenders are licensed from the UK Office of Fair Trading (OFT) and lenders are evaluated for safe lending practices.

Services Offered by Those UK Based Short Term Loan Lenders

Typically, cash advance services offer borrowers advances starting from £300 pounds. These can be paid off within 7 days, 14 days, 21 days, 28 days, or even up to 3 months. These loans carry extreme interest rates which can accumulate to be much more if any payments are missed. Most lenders charge APR of over 2000% and benefit from the fact that they are short term loans. So, if loans are rolled over for longer period of time such as months, then that will mean the borrower payback an interest which overlooks the original loan amount. The average charge per £100 borrowed over a month will carry interest of approximately £25. This is almost twice as much as typical bank loans however due to its short term period and hassle free loan application processing it’s the easiest payday loan to get for borrowers.

Furthermore, cash advances allow British residents above 18 years of age with an income to apply for payday loans over the phone and/or online at anytime. Payday loan services are offered with utmost ease for borrowers through fast application processing and immediate payday loans fund transfer to their personal accounts. Theses helps borrowers deal with sudden financial crisis which they are able to endure from cash advances from payday loan providers. Borrowers find themselves in circumstances such as unexpected medical emergencies, excessive utility bills, home repair, and other situations which arise without notice. Financial service providers give them easy to get payday loans to deal with these urgent needs until they receive their salary and/or are financially capable of coping with these situations in the near future. Financial service providers such as the Dollar Financial Group, Money Shop, Express Finance, PayDay UK, Wonga, Credit on Demand and Paydays Lead present borrowers an opportunity to get a payday loan with bad credit.

References

01. Marie Burton, Keeping the plates spinning: Perceptions of Cash Advances in Great Britain
02. BBC News: Short Term Loans Services
03. Payday cash advance loans for the UK consumers
04. Consumer Focus for Bad Credit
05. Consumer Credit Regulations
06. Wikipedia.org: UK Based Payday Loans
07. Wonga.co.uk
08. PaydayUK.co.uk
09. CreditonDemad.co.uk