Payday loans include a short term unsecured sum of money that is provided usually for a huge rate of interest. They are perfect for overcoming short term financial crises. They are however not fit for long term purposes chiefly owing to the humungous rates of interest that are levied against them. It is however not difficult to get payday loans in Surrey.
The process of getting a payday loan
A payday loan involves a process that has much less hassle and requires much less formal procedures as compared to a regular loan. A payday loan is pretty accessible since it can also be applied for through an online application. Some payday lenders claim to be able to evaluate the application in a matter of a few minutes. Taking a payday loan usually involves the borrower writing a cheque for the amount of money that he has to borrow from the lender along with a fee that is to be paid and leaving it with the lender. Therefore, when the period of the loan is over, the lender may cash the cheque and get his/her payment back. Certain lenders nowadays extract payments from the borrower through debit cards. This also means that they can have access to the borrower’s account and can take payments from their accounts without really informing them of it. This makes it difficult for the borrower to have a precise control over his finances.
The interest rates for payday loans are huge as has been mentioned earlier. They are extremely expensive and it is even possible for lenders to charge as much as five thousand percent rate of interest on the amount. It is understandable therefore, why payday loans are meant to be for short periods of time.
Payday loans therefore, because of the huge amount of interest levied on them are not a long term solution to financial crises. They end up increasing the expenditure owing to the huge expense involved. Therefore one should have a clear idea about one’s future financial status after a payday loan before applying for one.
Although payday loans are by and large hassle free, they still have some requirements on part of the borrower to be applied for. Firstly, the borrower has to provide evidence that he has a recurring source of income so that the agency providing the loan can be sure that the borrower shall return the money. He also cannot have cases of bankruptcy pending against him and should have a savings bank account that should be functioning at least a month before the loan is applied for.