What Actually Is A Payday Loan?

You’ve probably heard plenty of stories mentioning payday loans floating around the media, and the likelihood of them being negative is high. Despite them being helpful and convenient they are something that can cause further financial problems if used incorrectly. If you are looking for some sort of quick fix, you may be considering all of your different options. From borrowing from friends and family to borrowing a loan, there are plenty of ways you can get back on track financially. But, what actually is a payday loan?

Why do people borrow these loans?

Usually, people will borrow a payday loan when they are desperately needing some sort of extra financial support. With this specific type of loan being so short in duration, it is one of the easiest to manage and repay. Although, you should only borrow a payday loan if you find yourself in a financial emergency. This could be something along the lines of needing to pay debts, or medical expenses etc. They should not be used unless necessary as you do not want to find yourself depending on this as a long-term plan.

How does a payday loan work?

After applying to either a loan company directly or through a broker your application will be reviewed and either accepted or declined depending on factors like your credit score and your financial history. If you have been accepted you will receive a notification and your loan soon after. With a payday loan, typically you would borrow the money and repay it on your next payday. Please be aware that when repaying your loan the amount will be slightly higher due to interest rates. For more information on how they work click here.

Are there specific amounts that you can borrow?

Yes, there are specific amounts that you are able to borrow when taking out a payday loan. As seen on our loan calculator, payday loans range from £50-£1500. Here at BingoLoans, we believe that offering loans at the lower end of the scale is very helpful, especially to those who only need to borrow smaller amounts. With this type of loan, you’re unable to borrow more than £1500 as it would be extremely difficult to repay in a short amount of time. Therefore, sticking in between these two brackets gives you and us an easier experience of borrowing and lending.

Are payday loans a good or bad idea?

We understand that managing your finances can be hard. With all the different budgeting methods and techniques which you may follow in order to have a stable relationship with money, it is more confusing than ever. But, this is why you should find methods which work for you. Payday loans are there to fall back on as a last resort in order to escape further debts. Although they can be very helpful, there are numerous risks that are taken when borrowing. Therefore, we suggest you try every other option before contacting a lender. This is in order to avoid further potential financial issues in the future.

Our website is packed full of information on payday loans, their purpose and how they can help, find out more here.