Payday Loans FAQs

by Lauren Strom Content Writer

Payday Loans FAQs
The ordinance on payday loans by the FCA has helped individuals to borrow money easily, but at the same time, it has created some chaos too. That’s why here in the blog we will try to regard some common questions that arise about payday loans or unsecured loans in general.

What are payday loans?

Payday loans are unsecured short-term loans provided to people in need of instant funds. The loan offers small amounts of money usually with a limit of 100 pounds to 500 pounds with an average repayment duration of 22 days. Many things are evaluated when you apply for a loan- including your income, your repayment ability, and your credit history.

Nowadays the search for Payday Loans with No Credit Check and No Guarantor is growing day by day. It is due to their ability to provide people with fast cash when they are in need. But these sorts of loans don't exist in the lending market. "No Credit Check" is a term that is used extensively in the UK. However, there is no such thing as no credit check. The 2015 FCA ordinance clears that a credit check is a crucial aspect for loan approval. However, if not the hard credit check, but a soft credit check is mandatory for the borrower to acquire a loan.

Common FAQs

Q. What is APR?

A. APR stands for Annual Percentage Rate. It is the percentage calculated by adding up how much interest charge borrowers will pay and how much additional charges will cost overall. This figure is then equated out over a year to provide a figure which allows borrowers to compare the cost of borrowing among different lenders.

Q. How to do Do lenders permit payday loans?

A. If you are dealing with a regulated lender, your loan approval will be subject to a credit check and an affordability check. Some lenders will also ask for proof of employment and earnings before approving a payday loan. However, lenders who provide unsecured payday loans stress more on your creditworthiness and current financial situation, rather than credit scores.

Q. Do loans with no credit check exist?

A. No, as "no credit check loans" doesn't exist. A credit check is important as it is a way of refining your relation with debt and also gives a firm knowledge about your credit repayment capability. Borrowers in need of quick cash can easily apply for a payday loan with a soft credit check. Also, it doesn't hamper the credit rating of the borrower.

Q. What are the kinds of a payday loan?

A. There are a few different types of payday loans available to short-term borrowers, the most common among them are:

Typical Payday Loan

The popular a variant of the payday loan – borrowers take out a loan of between £50 and £500, repaying the whole amount plus interest charges at the end of their chosen term (from one to 22 days). The loan term also depends upon one lender to lender.

Instalment Payday Loan

Instalment payday loans are typically from three to 12 months, an instalment loan allows you to repay a small loan amount with interest into parts- which can make repayment more flexible.