It would be no exaggeration to state that the majority of media coverage related to payday loans does, to some extent, veer towards the negative. However, because of this, the core features associated with such loans are often overlooked and therefore, the people that could benefit may not consider them a viable option.
Any loan – regardless of the reasons for it being taken out – needs to come from a place of care, consideration and deliberation. A loan should only be contemplated if it can be paid back on time, with payments made as regularly as is required. When it comes to payday loans, the same approach exists; they can be incredibly useful, but one should never be taken out if it is liable to make an individual’s financial situation in any way worse.
However, for those who need an injection of cash quickly and will be well able to pay it back on time, payday loans can be akin to a godsend. So, with that firmly in mind, let’s take a look at eight of the primary benefits associated with payday loans that are very often overlooked or ignored.
1. People With Bad Credit Are Not Excluded
Many people with a poor credit score – regardless of how that credit score was obtained – can struggle to get a loan through traditional means. This has been especially true in the wake of the 2008 financial crisis; banks and lenders are now far more reluctant to dish out loans than they were previously. The coronavirus crisis will likely be liable to exacerbate this situation.
This often means that people in debt will struggle to extract themselves from their poor financial state, resulting in people being stuck in debt for many years longer than is necessary.
While payday loan lenders do indeed carry out robust checks on people’s financial situations, the risk of it not being repaid is somewhat mitigated by the higher levels of interest applied to the loan. However, such interest will only be applied to the loan should it not be paid back at the agreed time, meaning that individuals can obtain a payday loan without incurring excessive fees or charges.
2. The Application Process Is Generally Quick and Simple
One of the primary benefits of a payday loan is that they are designed to provide immediate financial relief. It is, therefore, essential that the application process is easy to follow and can be completed quickly.
Generally speaking, any application can be filled out online and only requires a few pieces of personal data, all of which will be necessary for any adequate checks to be carried out. It is worth highlighting that all information handed over to the payday lender will be kept private and confidential and will never be given to third-party companies without the consumer’s consent.
3. The Management of the Loan Is Very Simple
When a short term cash loan is taken out, the management of it must be as simple and consumer-focused as possible. The vast majority of payday lenders will set up borrowers with an account that shows how much has been borrowed, how much needs to be paid back, any associated deadlines, and contact details should you (as the borrower) have any questions or queries. This means that it is far less likely bills will hit you that you were not expecting.
4. Early Repayments Are Possible (and Encouraged)
There is a common misconception that payday lenders make it difficult for loans to be repaid so that interest mounts, but this is absolutely untrue; it is far more beneficial for the lender to treat all consumers with respect, after all, so that they will return in the future should they need to.
If you, as the borrower, come into money more quickly than you were expecting, it is completely possible – and encouraged – to pay back part or all of the loan early, as this will mean no excessive fees or interest payments.
5. Payday Loans Can Offer Immediate Assistance at Difficult Times
Emergencies rarely call ahead with a warning, and so when things go drastically wrong – a car breaking down, a fridge refusing to work, a pipe leaking – it is sometimes necessary to access money quickly. Research suggests that around 6.5 million adults in the UK have no savings at all, and so for these people, a payday loan may be the only way to tackle a problem that needs to be solved immediately.
6. You Could, in Fact, Use Payday Loans to Save You Money
It may sound somewhat paradoxical, but a payday loan has the capacity to save you money when used correctly. For example, if you have numerous debts to pay off, a payday loan could be used to eradicate a few debts in one fell swoop, ensuring that you will not be hit by an array of interest fees, overdraft costs or any other associated charges. This can be especially useful if you need to make a credit card payment, for example.
This option could make your debt situation much easier – you could end up with a solitary loan to pay back rather than several – but it is an option that should only be considered if you know that you will be able to pay back the amount required in good time.
7. It Is Likely to Only Be a Short-term Financial Impact
Many loans are based around putting you in debt for an extensive period of time – 12 or 24 months, generally speaking – and lure people in because payments each month are relatively low. However, this means that debts will be hanging over your head for a long time, and this is not an issue that tends to exist around payday loans; these particular loans tend to be handed out quickly and then repaid with equal haste.
8. Lenders Can Be Trusted
As mentioned earlier in this piece, payday lenders focus on retaining good relationships with customers and being a reliable option; if they can’t be trusted, why would anyone ever use them?
All lenders of finance are required to be authorised by the FCA before being legally allowed to carry out their operations. This means that all payday lenders have been thoroughly vetted and assessed, and their business operations verified as entirely legitimate and viable.
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