At one stage or another, many of us will face some form of financial emergency, which can range from an emergency in your home such as a burst pipe or damage, a broken-down car or an unexpected medical bill. When facing a financial emergency, some individuals may require a payday loan from a lender such as Uncle Buck, in order to provide them with financial aid to cover the bill until next pay day. But how can you choose the right payday loans lender for your requirements? Here, we’ve put together a quick guide to cover the key points that you need to know.
The Difference Between Direct Lenders & Brokers
The first step to finding the right payday loans lender is understanding the difference between a direct lender and a broker. A direct lender is a lender which provides the funds directly to you, without any interference from a third party. A broker on the other hand, will pass your information onto a panel of lenders in order to find the best loan rates for you. There are some fees and charges related to brokers, depending on how they operate, so it is important to find these out before deciding on whether you want to opt for a direct lender or a broker.
This is the single, most important stamp for a payday loans lender. The Financial Conduct Authority (FCA) regulate the payday loan market, and lenders without FCA regulation can be deemed as less trustworthy than those with authorisation. FCA authorisation means that the lender must abide by the regulations put in place by the authority, which are designed to protect the consumer. This includes caps on interest rates and charges, which ensure that the borrower will never have to pay back more than double what they have borrowed. FCA authorisation should be stated in the footer of the lender’s website.
Look For A Responsible Lender
Responsible lending should be an industry-standard when it comes to payday loan lending, so ensuring that you opt for a responsible lender is important. Look closely at the lender’s website and see what they are offering their customers. Determine whether there is a specific criterion which is put in place by the lender in order to ensure that individuals a protected against defaulting unnecessarily. You may also want to determine the types of checks that are carried out (often both credit and affordability checks) to make sure that the lender is a responsible one. This will ensure that you are protected in the event that you take out a loan with the lender of your choice.
Consider The Cost Of A Loan
Understanding the cost of the loan you are looking to take out is important, in order to ensure that you are able to meet repayments on time. While you may be looking to take out £1000 over the course of 3 months as part of your payday loan, the actual cost of the loan could be higher than this. Most lenders will charge a maximum of 0.8% interest a day which has been recently capped by the FCA in order to protect consumers. The longer you take out a loan for, the higher the final cost of the loan is likely to be.
In addition, if you default on a payment, you may be required to pay a £15 default charge. Consider any admin fees should they be required and ensure that you obtain the full cost of the loan including all fees and charges upon application, so you are not faced with any hidden charges further down the line. APR is also different depending on the lender, as this is calculated across the period of a year, so it may be worth comparing this.
Finding the right payday loans lender is important to ensure that you are able to meet repayments on time and find the right loan to meet your needs. Doing your research and comparing lenders can be highly beneficial, as is educating yourself on the financial jargon to ensure you are not caught up with any hidden fees. Once you have found the right lender, ensuring that you can meet monthly repayments is imperative to ensure the payday loan does not have a negative impact on your credit score.