{"id":696,"date":"2024-05-25T14:27:43","date_gmt":"2024-05-25T14:27:43","guid":{"rendered":"https:\/\/www.drafty.co.uk\/blog\/?p=696"},"modified":"2024-05-27T08:57:48","modified_gmt":"2024-05-27T08:57:48","slug":"things-you-need-to-know-about-payday-loans","status":"publish","type":"post","link":"https:\/\/www.drafty.co.uk\/blog\/things-you-need-to-know-about-payday-loans\/","title":{"rendered":"6 Things You Need To Know About Payday Loans"},"content":{"rendered":"\n<p>A payday loan is a short-term borrowing method designed to bridge the gap until payday. Once you\u2019ve applied for a payday loan or alternative to <a href=\"https:\/\/www.drafty.co.uk\/\" data-type=\"link\" data-id=\"https:\/\/www.drafty.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>payday loan<\/strong><\/a>, it\u2019ll be transferred into your bank account near-instantly. The amount that you borrow from a payday loan direct lender will depend on the company you use and its limits.<\/p>\n\n\n\n<p>You\u2019ll also arrange a repayment period in which you\u2019ll pay back the amount borrowed plus interest in instalments.<\/p>\n\n\n\n<p>Like most short-term borrowing methods, there are benefits, risks and information of which you should be aware. You should evaluate your financial situation accordingly before committing to anything. However, if you\u2019re considering <strong><a href=\"https:\/\/www.drafty.co.uk\/loans\/borrow-money\/\" target=\"_blank\" rel=\"noreferrer noopener\">borrowing money<\/a><\/strong> but don\u2019t know for what to be looking out, here are six things that you need to know about payday loans.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.drafty.co.uk\/blog\/things-you-need-to-know-about-payday-loans\/#1_eligibility\" >1. Eligibility<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.drafty.co.uk\/blog\/things-you-need-to-know-about-payday-loans\/#2_effects_on_your_credit_score\" >2. Effects on Your Credit Score<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.drafty.co.uk\/blog\/things-you-need-to-know-about-payday-loans\/#3_interest_rates\" >3. Interest Rates<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.drafty.co.uk\/blog\/things-you-need-to-know-about-payday-loans\/#4_what_can_i_use_a_payday_loan_to_do\" >4. What Can I Use a Payday Loan To Do?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.drafty.co.uk\/blog\/things-you-need-to-know-about-payday-loans\/#5_what_are_the_disadvantages_of_a_payday_loan\" >5. What Are The Disadvantages of a Payday Loan?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.drafty.co.uk\/blog\/things-you-need-to-know-about-payday-loans\/#6_alternative_products\" >6. Alternative Products<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_eligibility\"><\/span><strong>1. Eligibility<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The truth is that each payday loan provider works differently. Every application has different hoops through which you&#8217;ll need to jump. To make your life easier, it&#8217;s worth checking whether you&#8217;re eligible for a fast payday loan or not. The main eligibility checks that a payday loan provider will carry out are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Age<\/li>\n\n\n\n<li>Credit score<\/li>\n\n\n\n<li>Steady income<\/li>\n<\/ul>\n\n\n\n<p>Payday loan direct lenders need to have this information as they need to know that you\u2019re a responsible borrower. If you\u2019re seen as a risk or careless with money, your chances of getting a payday loan are slim.<\/p>\n\n\n\n<p>There are other alternative short-term borrowing methods, such as a line of credit, which offers a different product, different eligibility checks and different benefits. Take a look at a <strong><a href=\"https:\/\/www.drafty.co.uk\/credit-line\/\" target=\"_blank\" rel=\"noreferrer noopener\">Drafty line of credit<\/a><\/strong> to see what the fuss is about.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_effects_on_your_credit_score\"><\/span><strong>2. Effects on Your Credit Score<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There\u2019s no doubt that taking out an instant <strong><a href=\"https:\/\/www.drafty.co.uk\/blog\/do-payday-loans-affect-your-credit-score\/\" target=\"_blank\" rel=\"noreferrer noopener\">payday loan will have an impact on your credit score<\/a><\/strong>. If you\u2019re irresponsible with your borrowing, miss payments or continuously take out new loan agreements, your credit score will be negatively impacted.<\/p>\n\n\n\n<p>However, if you manage your payday loan correctly and make your repayments on time, it could have a positive influence on your credit score. Similarly to a line of credit, making payday loan payments on time will demonstrate your ability to manage money and be a reliable borrower.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_interest_rates\"><\/span><strong>3. Interest Rates<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><a href=\"https:\/\/www.fca.org.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>The Financial Conduct Authority<\/strong><\/a> caps the amount of interest that payday loan direct lenders can charge. By law, they must keep interest and additional fees to a minimum to protect the safety of borrowers. There is also an overall cap which ensures that borrowers will never pay back more than twice the amount that they use.<\/p>\n\n\n\n<p>In truth, there isn\u2019t a one-size-fits-all rule to payday loan interest rates. Each company is different and has its own policy. Doing your research and reading the fine print offers the best chance of staying in control of your situation. While you explore your options it might be good to look for payday loan alternatives like a line of credit \u2013 you might find them better suited to your needs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_what_can_i_use_a_payday_loan_to_do\"><\/span><strong>4. What Can I Use a Payday Loan To Do?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Payday loans are typically used for those unexpected costs to catch you when you least expect them. For example, if your washing machine gives up the ghost and you need some extra cash to cover the costs, a quick payday loan will help to ease the financial pressure.<\/p>\n\n\n\n<p>Speaking from experience, a Drafty line of credit works similarly \u2013 but without the added difficulties. Our quick and easy service works in the same way that you\u2019d use a quick payday loan. You can get rapid financial relief safely and securely.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"5_what_are_the_disadvantages_of_a_payday_loan\"><\/span><strong>5. What Are The Disadvantages of a Payday Loan?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As with all forms of short-term borrowing, there are risks attached. Before beginning a payday loan application, you must ensure that you know all the facts. If you start clued-up, there will be no nasty surprises along the way. The two largest disadvantages of payday loans are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>High-interest rates<\/strong> \u2013 If you\u2019re looking for an instant payday loan, you might face higher interest rates as you\u2019re borrowing over a short period.<\/li>\n\n\n\n<li><strong>Borrowing cycle<\/strong> \u2013 As payday loans for bad credit often have higher interest rates, your repayments might add up quickly and affect your financial stability in the long term.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"6_alternative_products\"><\/span><strong>6. Alternative Products<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If you want to borrow money over a short period of time, there are more products on the market than just <strong>payday loans<\/strong>. <strong><a href=\"https:\/\/www.drafty.co.uk\/loans\/short-term-loans\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/www.drafty.co.uk\/loans\/short-term-loans\" rel=\"noreferrer noopener\">Short term loans<\/a><\/strong>, <strong><a href=\"https:\/\/www.drafty.co.uk\/loans\/same-day-loans\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/www.drafty.co.uk\/loans\/same-day-loans\" rel=\"noreferrer noopener\">same day loans<\/a><\/strong>, <a href=\"https:\/\/www.drafty.co.uk\/loans\/bad-credit-loans\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/www.drafty.co.uk\/loans\/bad-credit-loans\" rel=\"noreferrer noopener\"><strong>bad credit loans<\/strong><\/a>, a line of credit and many more are similar products, each with different methods of lending.<\/p>\n\n\n\n<p>For example, A Drafty line of credit is a flexible, easy-to-use alternative to loans, <strong><a href=\"https:\/\/www.drafty.co.uk\/loans\/overdraft-alternative\/\" data-type=\"URL\" data-id=\"https:\/\/www.drafty.co.uk\/loans\/overdraft-alternative\/\" target=\"_blank\" rel=\"noreferrer noopener\">overdrafts<\/a><\/strong>, credit cards and <strong><a href=\"https:\/\/www.drafty.co.uk\/loans\/credit-cards-for-bad-credit\/\" target=\"_blank\" rel=\"noreferrer noopener\">credit cards for bad credit<\/a><\/strong>. Our line of credit offers a fresh perspective, helping you to boost your finances while staying in control.<\/p>\n\n\n\n<p>We do things a little differently here, too; for example, you can reuse your credit line as much as you like without having to reapply each time. What\u2019s more, you can repay a little extra at any time and you\u2019ll save on interest.<\/p>\n\n\n\n<p>Looking for a payday-loan alternative? <a href=\"https:\/\/www.drafty.co.uk\/application\/apply\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/www.drafty.co.uk\/application\/apply\/\" rel=\"noreferrer noopener\"><strong>Apply for a Drafty line of credit today<\/strong><\/a> at Representative 96.2% APR (variable).<\/p>\n\n\n\n<p><strong>Disclaimer:<\/strong> We are not providing financial advice, these are just tips for informational purposes. Also, we are not affiliated to any of the external parties linked here. They are provided for reference only.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A payday loan is a short-term borrowing method designed to bridge the gap until payday. Once you\u2019ve applied for a payday loan or alternative to payday loan, it\u2019ll be transferred into your bank account near-instantly. The amount that you borrow from a payday loan direct lender will depend on the company you use and its [&hellip;]<\/p>\n","protected":false},"author":47,"featured_media":761,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":{"0":"post-696","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-research"},"_links":{"self":[{"href":"https:\/\/www.drafty.co.uk\/blog\/wp-json\/wp\/v2\/posts\/696","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.drafty.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.drafty.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.drafty.co.uk\/blog\/wp-json\/wp\/v2\/users\/47"}],"replies":[{"embeddable":true,"href":"https:\/\/www.drafty.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=696"}],"version-history":[{"count":5,"href":"https:\/\/www.drafty.co.uk\/blog\/wp-json\/wp\/v2\/posts\/696\/revisions"}],"predecessor-version":[{"id":1165,"href":"https:\/\/www.drafty.co.uk\/blog\/wp-json\/wp\/v2\/posts\/696\/revisions\/1165"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.drafty.co.uk\/blog\/wp-json\/wp\/v2\/media\/761"}],"wp:attachment":[{"href":"https:\/\/www.drafty.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=696"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.drafty.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=696"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.drafty.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=696"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}