Wednesday, September 15, 2010

How Payday Loans Work

Payday loans fill an important void that is not served by traditional banks. In a perfect world, everyone would be on top of his or her finances, and there wouldn't be a need for payday lenders. But in reality, most of us have gotten behind on bills at some point.

QuickQuid is a United Kingdom lender that offers cash advances based on using your next paycheck as collateral. A payday loan is something to consider if you find yourself in a short-term bind and in need of money. For example, if you have been shopping for one too many "bargains", and can't make your credit card payment, a payday loan may help you out. Applying for a payday loan is simple, and takes only a few minutes to complete. Most payday loans are quickly approved.

QuickQuid has a FAQ that explains how to apply for a loan. A bank account and a steady job are the requirements to apply. The actual terms for bad credit loans are governed by the Consumer Credit Act of 1974 and other applicable UK laws. QuickQuid assigns borrowers to one of three credit tiers: excellent, good or average. This is based on various factors including, but not limited to, your credit history, employment history and loan repayment history.

Based on this rating, a finance charge of £10 to £14.75 per £50 borrowed will be assessed. For example, suppose that you have excellent credit and borrow £250 from the payday lender. The lender will transfer this money to your bank account, and expects you to pay this amount plus a fee of £50 on a £250 loan (£300 in total) when you receive your next paycheck.

I advise borrowers to read QuickQuid's disclosure of finance charges before applying for a loan. The effective annual percentage rate (APR) on the loan can be several hundred percent, depending on the situation. If used correctly, a payday loan can help tide you over to the next payday.

This post is sponsored by QuickQuid.

1 comment:

  1. Payday loans are a great way to get money if you find yourself short of cash before pay. the payday loan companies can operate as retail outlets where you might find on a busy street, and convenient Internet.

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