Anyone who has ever taken out a bank loan knows that it can take an age between the application being agreed, and the money of the loan appearing in your account. Banks are notoriously slow, and while you are waiting for the money, they are keeping the interest which you could earn, all for themselves.
Even a quick loan, such as those given by payday lenders, can sometimes take an age to arrive, and this is not what you want when you are only borrowing money in the short-term. You need the money there as quickly as possible so that you can put it to good use. You can work out the length of time the loan should take to appear in your bank account by calculating the different processes which you need to go through when applying for a loan.
From Application To Acceptance
In the old system, the time between application and acceptance could be a while. You would have to send off forms, and endure a credit check. This meant that your loan could take up to a week to be agreed.
More modern payday lenders prefer to use an online form, so they can see what you need, and how you are able to pay it back, without having to read through lots of faxed documents. This keeps overheads down, and also speeds up the referral time for the loan. Depending upon the company you choose, you could have the loan agreed within an hour of filling in the application form. Some may take a little longer, but it should not be more than a few hours.
From Acceptance to Account
Once the loan has been accepted, it is just a matter of waiting for the money to appear in your account. If you have opted for faster payment transfer, then you can expect to get your money within a few hours of talking to the company and getting their agreement.
Alternatively, if you have opted to have the money delivered by an overnight courier, then you can expect this to take slightly longer, although most companies will send the money through the same day, and it should be with you by the following morning.
Although this is standard procedure, there will be circumstances which could make the loan take longer. For example, if your loan is agreed late on a Friday evening, then your bank might not process it until the following Monday, leaving you without cash for the weekend. However, this does not happen often, and most loans are given on the same day they are agreed.
My major concern is that if I borrow say, £250 today, and then pay back approximately £300 in a couple of weeks when I get paid, then I’m £50 worse off (plus the £250 originally borrowed) and still be only just starting the month. Once I’ve gone down the route of the payday loan will it then be self-perpetuating, as I will always have a shortfall, unless I’ve been fortunate and either had some overtime pay at work, or a windfall from another source. I think that if I had an emergency – it could be anything – but maybe the car needed servicing and extra repairs were required then a payday loan could be a lifesaver. I’ve probably budgeted for the service and have money set aside for repairs but they’ve been required earlier than expected. In such a situation one of these loans could be beneficial.
Easy to be approved for payday loans
I am still assuming that it is relatively easy to actually get one of these instant online loans. One would never know until and unless you applied. I, on balance, still think that it is the start of a slippery slope and I wouldn’t recommend anyone starting down this path. I understand why people would chose to want one. Instead of being “tutted” at by the bank at being so bad at managing my money, I can fill in a simple form, and have the money in my account within a few minutes – certainly in less than a couple of hours. If I’m happy to pay the high fees as a trade-off for the convenience, then that is my choice, and it’s always good to have more than one option.
No matter your level of financial freedom, there are bound to be times when you may just be in need of something extra. Most times it happens in the event of an emergency; such as a mechanical problem with your car. While that may be a little hitch for those who are cooling off at the top most part of the financial ladder, for those living on pay-cheque to pay-cheque; that could be a time to expect a miracle to happen.
Numbers of payday loan lenders increasing
With such need in the heart, people are keen in moving toward payday loan companies for assistance. One beautiful thing about cash advances that attracts borrowers’ is that you can get your loan in an hours time even if you are bankrupt. As such, payday loan lending has been on the rise in the United Kingdom, some estimates stating it has quadrupled in the past 4 years.
Apart from the fact that you can obtain such loans with ease, a careful observation has revealed that the interest rate charged by payday loan firms on borrowers, is lesser than what defaulters are to pay in the event of going over the overdraft limit on bank lending. It is also glaring that the UK is yet to experience a total liberation from the shackles of the recession. Banks in the UK have affirmed to the fact that they are limiting lending and that, with the idea of an early recovery from recession in doubt, they are to put higher interest into planned overdrafts as the economy is predicted to be in this state for the next 5 years.
The growth in UK payday loan lending is also due to the fact that,
- While for countries like Canada, and some states in the US, the business has been regulated by the government to the extent of imposing a limit on repayment of loan; the easy credit business in the UK has been allowed to run wild without strict regulations to assist borrowers come off the hook as soon as possible. This has made loan firms in the UK so prosperous over the years.
- For some who have been successful as borrowers, payday lenders should be allowed to grow in the UK; but a higher percentage of Britons would rather have the government do something about the interest rate charged on borrowers. Such rate could go up to 2500% APR, and that can sentence a borrower to a lifetime of debt repayment.