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Representative example: £500 borrowed for 90 days. Total amount repayable is £672.60. Interest charged is £172.60, interest rate 140.0% (variable).
A payday loan is any amount of money you borrow from a payday lender for an emergency with the intent of paying it back within a short period of time. Guaranteed payday loans are an alternative to the conventional loans offered by banks. They are also referred to as guaranteed short term loans or payday loans.
Although they are called “guaranteed” loans, you are not entitled to a loan because the lender has to run a background check on you to approve your application.
Payday loans are perfect for emergencies. You should only request for the loan if something that requires a quick infusion of cash comes up and you cannot raise the money on your own. Such situations include: • Emergency car repairs
• To settle an unpaid utility bill that could lead to a disconnection
Whatever prompts you to apply for the loan should be a genuine emergency. Do not borrow to pay for luxury goods or services.
Applying for a payday loan takes place faster than applying for a normal bank loan because there is no paperwork to file; the loan application is done online. The application process can vary from one lender to another but here is what the typical procedure will look like:
Ensure you eligible for a guaranteed payday loanPayday lenders have more relaxed rules than banks when it comes to approving loans. They can approve your request even when you have a bad credit score. Nevertheless, they still have to ensure that you will be capable of settling the loan.
To check whether you qualify, ensure that you meet the following requirements:
• You must be at least 18 years old. They cannot lend to minors
• Most lenders need you to be younger than 65 years which is the government retirement age.
• You own the bank account to which you want the money to be deposited. For legal reasons, they cannot allow you to use someone else’s account.
• You must have a monthly income. You must prove that you either work or receive money from a legal source regularly. Some lenders only lend employed people, others are willing to look at other sources.
• You should not have a CCJ to your name. Although you can get away with a bad credit score, most lenders cannot look past you having a CCJ because it is a negative indictment on your ability to pay debts (and is worse than a bad credit score).
• You should not have been declared bankrupt within the previous year of requesting the guaranteed short term loan.
• You should not be on a debt repayment plan
To pick a good lender, use the following criteria: • Check the loan limit. The amount of money they can lend you.
• Loan approval rate. What are the chances they will approve your request? This is typically high because guaranteed loan lenders are usually less strict on loan requirements.
• How long does it normally take them to approve an application?
• How long will they give you to repay the money?
• How is the repayment plan? Do you have to pay the loan in a lump sum? If not, find out how the instalments work.
• Does the lender accept debit card, standing order, or direct debit for repayment?
• Fees and interest rates. Some lenders have hidden fees that you only catch as you pay the loan. However, if you do your research, you will know whether there are hidden fees before you take the plunge.
If you find a lender who meets your criteria, you can apply for the loan.
Here, you should fill out your personal details as truthfully as possible. Providing false personal information is illegal. Most lenders will ask you to create an account on their website. They usually ask for the following information:
• Email address
• Date of Birth
• Telephone number
• Number of financial dependents
You will then be asked to provide your financial information but it depends on the lender. It will include:
• Your bank account and account sort code
• Your credit or debit card number
You will be required to provide the loan details. They include:
• The amount you should borrow
• The amount of time you want to pay it back
After you’ve submitted your loan details, the lender will process your request and approve or reject it. The amount of time it takes for this to happen varies depending on the lender.
A CCJ (County Court Judgement) is issued against you when you do not follow through with a Court Claim Form which is issued when your creditor takes you to court for defaulting on payments. It is a matter of public record. Many payday lenders see it as a red flag and are, therefore, likely to decline your loan application.