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Have you ever made an appointment with your bank or building society to discuss the possibility of getting a loan, only to come out feeling like nothing suited you? They may have offered an overdraft, a credit card, or a traditional loan but none of these may have been appropriate. Credit options like this are normally around £1000, perhaps less, depending on the product, but this may be far too much. Sometimes we only need a small amount of money and taking out more debt that we actually need isn't sensible. Sitting down and having the conversation itself may have been a complete waste of time.
Sometimes we just need a small burst of cash, something that allows us to fill our cupboards with food for a week until pay day arrives. Frankly, banks are not suited for this sort of credit. It’s simply not worth it for them, which is probably why they don’t offer such small loans. Even once we've logged onto the online portals of many banks it's hard to find these smaller products. The advantage of these portals is many banks have auto approved’ loans that the customer can take out simply by logging in and selecting one. But even these are usually amounts of £1000 or more.
When we’re looking for a small loan, be it to fill our cupboards, buy a new tire for our car or anything else, it’s nonsensical to borrow more than we need. But historically we’ve needed to do so just to get accepted for any credit at all. In the long run this isn’t always economically viable, and it would be better if we could borrow the amount we need, then pay it and the interest back later.
Now for an amount like £50, many of us would consider borrowing the money of a friend or family member, especially if we can pay them back on pay day. Many of our friends and loved ones would be more than happy to help in this situation, but here’s the thing; our finances are private. We may not want to alert those around us to our financial difficulty. What’s more is if we only need an amount like £50 then chances are our current predicament is just a blip and there’s no need to make anyone we’re close to worry or think otherwise. Where borrowing from our friends and family may be interest free, sometimes it’s easier to borrow from a lender and pay the interest.
Time may also be of the essence, £50 isn’t a lot of money but if that’s what we need for a new tire on our car in order to get to work and we’re short, then all of a sudden that £50 becomes a very significant amount. In this situation we’ve not got time to haggle with the bank or consider the pros and cons of going to our friends and family for temporary financial support. We need that £50 to resolve our current crisis, and in that moment that’s all that matters. The interest and any other concerns are not what we find pressing in that moment. This is a common situation in a crisis, and being short of £50 when that’s what you need to resolve said crisis, makes obtaining that money the priority.
Here's a representation of how much you’d have to repay with a fixed 292% APR for taking out £50 payday loans over certain months.
If the car needs a tire, a pipe is leaking, or you need to buy food to feed your children for a week, then there is a source you can turn to. Consider applying for a payday loan. These can usually be approved within 15 minutes with the understanding that you’ll pay the money back when you next get paid. £50 can be the difference between resolving a crisis, but if you don’t have it that crisis could intensify. If you were closer to payday this may not be a problem, but if you’re not then a payday loan can help bridge that gap in the meantime.
Not only are £50 payday loans quick and easy to apply for but they are usually approved without needing to fill out pages and pages of paperwork. You also don’t need to speak to anybody directly either face to face or by telephone. So don’t worry about needing to wait on hold or convince someone why you need the loan. Chances are it will be approved automatically, especially if you’ve got a good credit rating.
But even if you’re credit history is less than stellar (and trust us you’re not alone), chances are you’ll still be approved. Where payday loans are regulated by the exact same FCA rules that govern all lenders in the UK, their application criteria is purposely more lenient. This is so people who’ve had difficulties in the past with credit have somewhere to go. A lifeline in a crisis. Also wage day loans are generally for smaller amounts of cash, so getting deeper in debt from one is highly unlikely.
Those with bad credit ratings can also take advantage of small loans to improve their score. Every time a customer is approved for credit, regardless if it’s a £50 loan or a £50,000 loan, they get a positive point added to their credit file. The mere act of being approved is enough to help score the point as it shows a lender had the confidence in them to approve it. The fact that it’s a payday loan of £50 and nearly everyone gets approved it by the by.
This creates a helpful little loophole that those with poor credit can take advantage of to build their score up quicker than previously thought possible. Each time they pay the amount back they also get a positive point on their credit file. This is because they’ve used credit and paid it back successfully, closing an account without arrears. This is something that can be taken advantage of more than once too. After all, borrowing £50 then paying the interest back once we get paid is generally quite an easy thing to achieve, and our credit ratings will thank us.
Always make sure the lender you visit is regulated, approved and audited by the Financial Conduct Authority. This ensures their legitimacy and authenticity.
Some lenders have a promo that allows you to score a discount when you pay your loan earlier. For instance, your loan term is 6 months, but you've paid the total loan amount in just 2 months. Depending on a lot of factors, you can save a significant amount of money in interest payments.
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