Mistakes to Avoid while Applying for Payday Loans

Mistakes to Avoid while Applying for Payday Loans

Easy access to loans despite bad credit or low loan affordability could be termed as the prime factor to ensue a debt trap. Whether you are a student working part time or a full time employed person, you need to be careful before you choose payday loans to meet your cash obligations.

Being a swift source of funding for people requiring fast loans, payday loans are quite popular among bad credit borrowers or those who lack guarantor or collateral to obtain conventional credit. According to one report, 51% of young women and 45 % young men in UK borrow cash until payday. Owing to high interest rate and fast pace of loan rates, payday loans can roll over to risky levels if one fails to repay on time.

To ensure peace of mind with payday loans for bad credit, you must go through a quick checklist discussed below:

Know about FCA Cap and Your Rights

The Financial Conduct Authority is a regulatory body in the UK and protects borrowers’ rights. According to Law it is mandatory for a lender to be regulated by FCA before extending the loan on interest rate. To protect the consumers against the loan sharks the FCA has capped a maximum limit of £24 interest rate on £100 loan for a period of 1 month.

No lender can charge you more than this amount in a single month. Also they cannot charge you more than the principal amount as interest or late charges for loan.  FCA has also categorically directed that borrowers who default the timely repayment shall not be charged more than £15 as default charges. Also, interest and default charges on unpaid balance amount shall never be more than the initial quoted rate.

Thus it is important to know about your rights and do not get intimidated by the lender threats ever.

Deal with Authorised Loan Partner

To ensure complete peace of mind while borrowing loans, you must always contact a lender via an FCA authorised loan broker. The loan brokers have obligation to assess each of the borrower’s loan application before sharing the deals. According to FCA, a broker is expected to assess loan repayment capacity of the borrower before it shares the deals. And thus you are likely to avail an affordable loan with loan broker. Be it bad credit instalment loans or no credit check payday loans, you could be rest assured of availing a low cost loan with the help of loan brokers.

Find Ease for repayment

When loan instalment is affordable, you avail ease of loan repayment. Such loans are more likely to be paid on time. Besides, you can also use loan advice for setting up a loan repayment plan. Make sure you have enough funds or source of funds to repay loan plus interest rate on your payday. Also, ensure that you have required funds to stay afloat the next month with less cash in hand.

One of the best ways to ensure affordable loans is to borrow only for the urgent requirements. Never borrow more than what you need compulsively. The smaller the loan amount, the easier it would be to arrange for the same.

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