For those facing financial difficulties, gaining access to quick cash can often be a priority. Nowadays there is a vast selection of lending options available to consumers and that means finding the best product can be difficult. Short term loans are one popular option but how do they work?
What are quick cash loans?
Payday loans are a type of short term money lending often referred to as quick cash loans. They are designed to offer individuals almost instantaneous access to vital funds with loan amounts typically ranging from £100-£1,000. Quick cash loans can be applied for, sometimes even if you have a poor credit rating as long as you meet the necessary criteria to be deemed eligible for the payment.
Unlike traditional bank loans, the application process involved for this short term form of money lending is far easier and quicker. Applications can even be made online and endless form filling is not a prerequisite. Even aspects such as credit checks are less stringent - although they are still completed. However, payday lenders are more interested in your current situation than your past affairs and that means your current salary carries more weight when applying for payday loans. These loans can even help boost your credit rating by showing your ability to meet repayments.
What if you need quick cash?
The whole point of payday loans is to offer individuals quick access to fund and that means those looking for quick cash are in luck. The application process itself should take no more than twenty five minutes and as the whole lending is based on a short time scale the money can be transferred into your account as soon as possible - providing your application is approved, of course.
Overall the term of the loan is generally twenty-eight days, meaning that repayments are made in-line with your next date of pay: hence the term payday loans. This repayment is typically made automatically via a debit card transaction, meaning there is little involvement needed from the borrower.
Applicants are asked to provide these card details when applying for the loan and that means all they have to do is make sure there is enough money in their account when the repayment is due. This makes the entire process quicker, easier and more convenient for borrowers and lenders alike.
How does interest affect payday loans?
One of the biggest misconceptions over short term lending is that a payday loan will be partnered with an extortionate amount of interest when the repayment is due. This is far from the case and the interest accredited by the payday lender should not be excessive.
The misconception arises because all interested rates are represented by an annual percentage figure (APR). Naturally, this figure will be high for payday loans but as the money is borrowed on a much short time scale the actual amount repaid is far more reasonable.
It is therefore vital that applicants look for realistic examples of payments associated with the loans rather than basing their decision on the APR figure alone. The interest is added to the total repayment of the quick cash loan with the whole payment made via a single transaction.