Why It’s Important to Compare Payday Loans
Payday loans and short-term loans have a complex reputation in the world of lending. It’s easy to assume that all the payday loans available on the market are the same, with the same high interest rates and complicated repayment terms. However, the truth is that there are countless different lenders out there, each providing loans with their own pros and cons to consider.
If you need a same-day loan to help you deal with a financial emergency as quickly as possible, don’t be tricked into choosing the wrong lending option because you’re in a hurry. With comparison websites, it’s possible to check the benefits of the different payday loans that are appropriate for you faster than you might think. Here’s why it’s so important to compare the differences between your available payday loans.
1. Get a Better APR Rate
The most obvious reason to compare instant loans is that you’ll improve your chances of getting the best APR. The annual percentage rate refers to the cost of the loan that you’re taking out over the course of a full year. Remember, most payday loans have higher APR rates than some of the other lending products on the market, but their short-term nature also means that the APR isn’t as significant as it seems at first.
Remember, the APR on a loan is often a better way to look at the full cost of your loan, than simply examining the interest rate. Every payday lender has their own distinct APR to offer, and it’s worth making sure that you don’t pay more than necessary by comparing your options.
2. Check the Lending Criteria
Another reason why it’s a good idea to compare your cash advance options, is that you will be able to check up on the lending criteria. Remember that certain loan providers will have specific requests when it comes to applying for a payday loan. While all lenders will not lend to anyone under the age of 18, some companies may need you to be in full-time employment, while others might be happy with a part-time job.
If you’re self-employed, or you have specific criteria in your file that might make it hard to apply for certain payday loans, it pays to know the lending rules before you apply. Remember that rejected applications leave a black mark on your credit history.
3. Reduce Your Fees and Charges
Another thing to consider when you’re looking at same day loans, is that some of them charge late fees that change according to how long it takes for you to make a late repayment. Other companies have a very specific default fee that’s added to your account when you’re late making a repayment. The financial conduct authority dictates that lenders can only charge up to £15 for a late fee.
To make sure that you understand the fees and charges associated with your instant loans, spend some time reading the fine print on your lending option before you agree to anything. There may even be certain extra fees for simply applying for a loan from certain providers, so it pays to be informed.
4. Get the Best Repayment Options
For short term loans, many lenders will collect repayments using something called a “continuous payment authority”. This simply means that your lender can automatically collect the money that they’re owed from your bank account without applying for authorisation. In certain circumstances, your lender may even be able to take a different amount of cash from your account each month if that’s what you agree to.
For some people, there are benefits to choosing a cash advance that’s paid back by a continuous payment authority. After all, it removes the risk that you might forget to pay off your debt on time. However, if you don’t feel comfortable with this option, you can always look for credit providers that offer different repayment methods.
5. Choose Your Loan Terms
Finally, most instant loans will only last for a very short period, often bridging the gap between one payday and the next. However, exactly how much time you can get out of a payday loan will depend on the lender that you choose. Some short-term payday loans can be paid back over a longer period of 2 to 6 months. When you’re comparing your options online, ask yourself how long you’re going to need to make repayments.
Ideally, it’s best to clear your debt as fast as you can, but you can always look for something that gives you some extra time if you need it.