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Borrowing

What Are Payday Loans and How do They Work

During our life time, we encounter numerous events that may leave us needing some extra, emergency cash. Unfortunately, not all people have it at the moment of the emergency, which is the main reason why many choose to borrow money.

However, the process of borrowing money may turn out to be quite difficult in case you have a bad credit score, or don’t have much to give as collateral for banks, which is why numerous payday lending providers have appeared in regions from all around the world. In fact, in the United States alone, the payday loan industry brings in about $40 billion per year worth of profits, which is quite understandable, considering the fact that people are in constant need of extra cash. While the fees are a bit high from time to time payday loans have proven to be an efficient solution in getting people the cash they need, quickly and easy, without much hassle, especially in the event of an emergency.

In this article, we will explore more about payday loans, how they work, their advantages and why you should consider getting one for yourself.

The main purpose of payday loans

Payday loans have been designed for people who are in need of some extra money before they get their next pay check. This makes payday loans a quick and easy way to get some extra money, which can then be used to take care of any emergency that may appear. Before anything else, it is important to keep in mind the fact that payday loans only give out small amounts of money, typically ranging from around £50 up to £1,000. Anything more than that would require you get an actual loan, so the process will be somewhat more complicated.

The process

Understanding the process of getting a payday loan represents the first step towards success if you ever intend to use these services. Most companies have physical stores, where you can walk in, submit your documents and get your loan, whereas others conduct their operations online, or via telephone.

1. Contacting the provider

Once you have decided that you would like to get a payday loan, you’ll have to look for a provider that fits your description, and has taxes that are compatible with your actual budget. Emu.co.uk is a good example of this. Once this happens, simply get in touch with the provider, either by going to their store, online or by telephone.

2. Submitting your documents

Most applications consist of a couple of documents, including banking information, employment information and contact information. If needed, the lender may also ask for some data on your friends and family, which they can call in case you refuse to pay back your loan.

3. Writing a loan check

Once your documents are approved by the payday loan company, you will have to write a check to the lender, outlining the amount of money that you would like to borrow, while also pleading that you will pay the amount due, alongside with the afferent taxes before a certain date.

4. The lender will proceed to deposit the money in your bank account

Once all of the formalities have been dealt with, the lender will proceed to deposit the sum directly to your bank account, or even give it to you in cash, depending on the agency. Deposit times vary. While some agencies may deposit the funds instantly, others may take about a day before giving you the funds.

5. The lender holds your check and then cashes your account

During the period of your loan, the lender will hold and take care of your check. Most payday loans last for 2-3 weeks, or even more, depending on the agency. Once the time is up, the company will proceed to cash out the sum from your bank account. In case you don’t have the money needed in your bank account, you have the possibility to ask for an extension that is usually in the range of 14 days. Do keep in mind the fact that this will most likely incur an extra fee that you’ll have to pay once the term is up.

Conclusion

Based on everything that has been outlined so far, getting a payday loan is both easy and convenient, as long as you afford to pay back the sum and tax, before the term comes. Not only this, but some payday loan providers are also open 24/7, which means that there is almost always an agency that you can go to, at any time of the day, in case you have to deal with an emergency. Payday loans are also perfect for those with bad credit, as agencies rarely require a credit check, given the small amount of money being borrowed to clients.

Bad Credit

How to Get a Loan When You Have a Bad Credit Score

Scoring a loan can sometimes end up being a tricky situation, especially for people who don’t have much to offer as collateral, or those who may find themselves with a bad credit score. Most banks and lending services refuse to talk to people who have a bad credit score, as they are outright considered untrustworthy. This is completely understandable, since no lender wishes to make business with a person who may not be able to pay the loan back completely, and during the specified timeline.

However, there are a couple of things that you can do to improve your credit score, thus increasing your chances of getting access to the loan that you need. In this article, we will explore some of these possibilities, thus help getting you a step closer to scoring a loan.

To kick things off, you want to make sure that you constantly check your credit reports. According to law, in most states, you are allowed to receive a free annual credit reports. Check it closely, and see if there are any discrepancies whatsoever. Most credit score work is done by actual workers, so human mistake is a possibility. In case you do happen to notice any form of issue in your credit report, make sure to get in touch with the collection agency, or any money managed firm, and bring the issue forward to their attention.

Once you have done this, then chances are that you might want to attempt getting a loan from your bank.

Before applying to other companies for loans, you can always check things out with your bank. These financial institutions hold lots of information about the job that you have, where you do your checking, but also data on deposits, your average daily balance, and any history of over drafts that you may have had in the past. This information can then be used by your bank, which will surely come up with a loan plan that you may use.

Always do your homework before applying for a loan.

This is an essential tip, especially if you’re looking for a personal loan, and have a bad credit score. At this moment in time, the Internet is filled with numerous companies that are willing to offer smaller, but still viable loans, to people with bad credit. If you have a job, then you can most probably, also be viable to get a payday loan. These are often the best for people who don’t have much collateral, and who also happen to have a bad credit score. The loan from payday loan companies is often lower than your monthly salary, and you are required to pay it back once you get your next pay check.

Checking whether the lender charges on origination fee or any other taxes

Upon getting a loan with a low credit score, it is also important to inform yourself whether the company that you choose charges any additional fees, other than the interest. Some may charge what is known as an origination fee, whereas other companies may ask for a service tax. Regardless of the type, always double-check to make sure that you can afford to pay back your loan on time.

Make a smart loan application, and practice responsible borrowing

Making your loan application is the last, but often one of the most over-looked at steps of the lending process. If you application is very good, you’re likely to receive a higher loan, and even a lower interest rate, according to the company that you’re hoping to secure the loan from. Responsible borrowing is also a smart idea, as almost no company will be willing to offer you a very large loan, if you assets are not worth much, and if you also have a small salary and a bad credit score.
Additionally, a good tip for loaners with bad credit scores would be to avoid borrowing more than they can afford to pay back, as this can quickly lead to many more complications, unwanted by both of the parties.

Last but not least, it is important to always pay back your loan in full, and without any afferent delays. Doing so will not only increase your credit rating, but will also enable you to access higher loans in the future, and place you on the path to financial freedom.

Based on everything that has been outlined so far, these were few of the main tips that you should keep in mind, when it comes down to securing a loan with a bad credit score. While it is definitely more difficult, it is not impossible, as long as you do your research, and perhaps, ask nicely.

General

Things You Should Know Before Borrowing Money

There comes a time in the lives of millions of people from all around the world, when they either need to borrow money, or are asked to lend money. Knowing the ins and outs of the practice is essential to making good decisions, and making sure that you are not affected from a financial standpoint.

With this in mind, it has been often said that money is quite personal, which is why people often face emotional trouble when it comes down to either borrowing, or lending money. In this article, we will talk about some of the main tips associated with both borrowing and lending, as an effort to make sure that you have decent knowledge in case you are ever put in the two situations mentioned above.

Borrowing money

When it comes down to borrowing money, doing it from friends or family members is not always a wise idea, considering the fact that it becomes a lot more emotional, and it can put some strain on both parties involved. With this in mind, it may be better to considering borrowing money from an alternative means, such as a bank, or lending company. While it is a bit more risky, it is safer in the long run, as there are clear conditions set-up and you won’t end up facing any surprises.

If you must borrow money from a friend, do it properly

It is often considered a good habit to ask friends for a loan in writing, and attempt to give out as much transparency as possible. By doing so, you will not damage the relationship between your and the lender, but also increase your chances of being able to borrow in the future, if you ever need to do so again. Also, avoid asking for astronomical sums, and attempt to disclose what you’re planning to do with the money, as this can create a better sense of trust.

Only borrow money from the people you trust

Choosing the person that you will borrow from can be quite difficult. Firstly, you can’t expect anyone to borrow you money out of sympathy, and secondly, it is important to only talk to people who you truly trust, in order to avoid getting the word out about your financial difficulties, but also to maintain a better relationship with the person that you are borrowing from.

Consider payday loans

If you’re in need of an urgent loan, don’t have an excellent credit score, or much to offer as collateral, then your best bet would be to choose a payday loan. These particular loans are designed in such a way, that they allow you to pay the loan back once you get your next pay check, so they represent a great way of getting some cash quickly, while also not having to worry about much in return.

Lending money

Avoid getting confrontational

Once you’ve made the decision of helping your friend or family member with some money, you shouldn’t get confrontational with them, or address the person in question as if they owe you something. By doing so, you will damage the relationship between you too, and also risk not getting your money back. Instead, if your friend is facing trouble paying the sum back, try to confront them in a friendly manner, and do inform that them you are in need of the cash back. Communication is indeed key, so if you don’t get your message across, you will not get your sum back. Based on this, don’t be afraid to confront your friend, but try to do it nicely at first. You also shouldn’t be afraid to drop hints, as the person in question, may already have the money, but they may have simply forgotten about paying it back to you. Dropping hints will also encourage your friends to be quicker in paying you back.

Attempt doing everything in writing

In case you’re worried about not getting your money back in full, or not quickly enough, you can attempt to do everything in writing. Simply sign a contract with your friend, disclosing the amount being borrowed, when it should be paid back, if there is any interest and what the repercussions are. While this likely won’t help you much in court, having some form of ‘official’ document will likely encourage your friend to give the money borrowed back as soon as possible.
Based on everything that has been outlined so far, by following these tips, you’ll be safer both when borrowing and lending money. Simply put, communicate efficiently, avoid getting confrontational and always think twice about borrowing or lending money from a friend, considering the fact that there are a good number of risks associated with the practice, and also numerous lending companies and banks willing to leave you out of the hassle.