Here, we take a look at how modern payday loans have come about and been embraced by the finance industry. We then look at the advantages of this financial product and describe the future as suggested by the current estimations for the expansion and globalisation of this important loan tool.
Modern Payday Loans
Modern payday loans can be termed as cash advances, because the best way to use them is to return them as soon as possible. There are around 200 payday lenders in the UK and they are serving the low-end consumers. The changes in the local laws regarding payday loans have made them more secure and people can now use them without having to worry about paying unimaginable interest amounts as well.
These days, you can get these loans on both pawn shops, as well as online. Although there was a negative perception about these loans in the past, they have become quite popular after the credit crunch of 2008. They are able to serve all those in immediate financial need and hence, many banks are starting to include this product in their group of offered services too.
Advantages of Payday Loans
Payday loans definitely have a lot of advantages. Here, we share some of the most prominent advantages of these loans, as they serve different consumers in the loan market.
Payday loans offer the option of providing fast cash. This means that you are able to pay for an important need very quickly. Most payday lenders process your loan requests within a day and this allows you to resolve your needs as swiftly as possible. This is perfect for people who have urgent needs, such as paying a utility bill or rent on time.
No Credit Check
Payday loans do not require an extensive credit check. This allows them to be processed quickly. These loans also provide the option of obtaining a loan for most people who have poor credit histories. Your eligibility is easily decided just based on your ability to return the loan with your current salary. All you have to do is select your repayment date and ask the lender to process the loan.
Although it may seem that you have to spend extra resources in order to pay back a loan with interest, payday loans can actually help you save money. You often need to pay additional charges and penalties if you miss your instalment on a number of bills. Taking the facility of a loan to pay on time saves you from a lot of hassle and also ensures that you do not have to pay any penalty. This means that you can avoid additional charges in terms of extra credit card fee or paying for bank overdrafts.
Improve Credit Rating
Payday loans also improve your credit rating, because you do not have to rely on using your credit card for every need. You can simply take a payday loan and return it as soon as possible. This way, you are protected against damaging your credit history by increasing the bill already present on your credit card.
Credit card loans can only be taken for particular needs. You need hard cash in order to spend on private matters. Payday loans are perfect for such needs. You can spend the money that you get, on travelling, paying a bill, or simply ensuring that you can buy an item, while it is on sale. Payday loans give you the independence that you require with your money.
The use of a payday loan frees you up from being answerable to a friend or family member who loaned you the money. It also gives you the independence of buying an item right now instead of having to wait for your salary to arrive, when the item that you are after may go out of stock. Payday loans help you manage your monthly budgets, especially if you are currently learning to manage your finances and are liable to make a few mistakes in calculating the available funds.
Easy to Get
Credit cards require a complete background check and many applications are often rejected due to poor credit history. On the other hand, payday loans are very easy to get. There are many online payday lenders, which allow you to simply provide information on the internet in order to qualify for the loan.
If you want to get a payday loan, all you need to show is that you have a job and are regularly paid. You need to mention the current salary that you are getting and there is a high probably that your loan application will be immediately approved after a simple background check.
Future of Payday Loans
The future of payday loans seems to be brighter than ever. With the arrival of new regulations that stop lenders from charging over 100% APR at any length of time ensures that a payday loan cannot bankrupt a low-income individual. Payday loans, in fact, are the top financial product for millions of people in the UK. People enjoy the swift process of getting these loans and are more than willing to pay the high interest charged on the product.
The future of payday loans also looks to embrace technology. Many traditional payday lenders are moving to an online mode, where they do not have to spend on keeping physical infrastructure, therefore reducing their expenses. This allows these lenders to give out payday loans with lower interest rates. It also allows them to cater to a nationwide audience.
As there will always be a number of financial institutions who will continue to support this necessary product, this market segment will continue to expand in the near future and we may observe a rise in the average amount of payday loans being taken in the long run.