New payday loan companies
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Representative Example: Representative 1286.98% APR on a loan of £300.00 with 5 monthly repayments of £101.03 Total amount repayable £505.13 Annual interest rate (fixed) 290%
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Author: Internal Marketing Department
New payday loan companies and understanding what they offer
If as a customer looking to borrow money they intend to submit a finance application they have to firstly consider a few things to help them complete this information as required. They always have to be completely sure that the money is definitely needed and they must then know what amount they need to borrow.
The type of finance must always be considered, people may not realise just how many financial options are available for people to take out. People can select from a single instalment payday loan where amounts are borrowed but then repaid in a single monthly period, true instalment loans are another finance type regularly obtained and this is when amounts are borrowed but then repaid over a set number of months that is mutually agreed between both the lender and borrower. Car finance can also be taken when someone makes a car purchase but then repays back over a number of months and after the balance is cleared then and only then will the car technically belong to the customer. Other finance can include lines of credit such as the credit card itself which allows Consumers to purchase goods or withdraw cash on credit and then a bill will be sent normally within a monthly repayment cycle.
Also something else to consider would be whether the loan product is affordable as no one will want to miss any repayments that will become due on that loan.
The lender is another decision that will have to be considered as there are so many different lenders to choose from and each of them offer different things to their potential customers. In the article below I am going to look at two particular products on what payday loan companies can offer and these will be the instalment loan product along with the single instalment payday loan.
Some people may not know what a traditional payday loan is, well a payday loan is a small loan funded by a range of lenders with high interest that will then need to be repaid back by a customer on their next payday. It is a short term way of borrowing money as people should only have the loan for a single month so a thirty one day duration is the maximum people can normally take one out for.
Once someone does obtain a payday loan then the full balance is then due on their next payday regardless of how long after they took the money that date is. With new cost capping rules most lenders do charge their interest on a daily basis which is definitely the cheaper option especially for people only looking to borrow the money for a few days.
The interest amounts set for a monthly figure can vary again depending on that lender chosen however it will most likely be charged at around £24.00 per £100.00 borrowed for a monthly interest amount (although this too cannot exceed the daily equivalent of 0.8%).
People will see that this is a high interest figure and when the full balance is due on the loan it can be tough to manage to repay. For example if someone was to borrow £400.00 for 30 days, up to £96.00 will be charged as standard interest on that amount so £496.00 is required to pay off the loan in full and for anyone to repay that amount on top of other financial requirements can be hard to manage.
As a borrowing alternative people start to consider instalment loans as a way of borrowing money. This is when you borrow an amount of money but then instead of clearing it in a single transaction they pay back monthly until the full balance is settled. More overall is repaid this way than a traditional payday loan yet the monthly repayment is lower due to the amount of repayments due to be made.
People can opt to clear instalment loans before their repayment term is up and they can save money doing it this way. A strong benefit of the instalment loan would be the fact that people can take out the product and then repay over a number of months giving them control of their own finances. Clearly this is not the same with single instalment payday loans.
A customer when selecting the repayment term on instalment loans should be aware that the longer they take out the loan, the more repayments made meaning more overall is repaid back to that lender.