Payday Loans Explained; Everything you need to consider

Payday Loans Explained; Everything you need to consider
September 8, 2016 Cash Lady

Things To Consider

Even though Cash Lady only deals with short term lenders, you can still end up with long-term debt. You must make sure to use loans responsibly.

What are they designed for?

Short term loans are not designed to be used as a regular or ongoing form of credit. They’re intended to be used for short term and emergency needs only. This is because the interest high and over time and they can become much more expensive than intended.  If you use them on a regular basis, it’s also likely to become an expensive way to take out credit.

Getting approved by a lender

If you are approved by a lender, that lender will have their own terms and conditions.  We strongly advise you to check before accepting any offers.  You will be under no obligation to accept the offer and you will not be charged anything by the lender if you choose not to accept it. The agreement will be between you and the lender and Cash Lady will not be part of the loan agreement itself.

What happens if you don’t repay on time?

Short term loans are a type of credit and, as with any credit, they come with certain risks if you don’t repay them on time. Cash Lady will never take or look for any money from you. If you are matched with a lender, they will have their own policies on charges, interest and debt collection.

These policies depend on the individual lender, but you may be contacted if you do not repay on time.  Your details could also be passed onto debt collection agencies . If you continue not to pay, this could lead to legal proceedings. It’s important to make sure that you don’t apply to borrow money that you don’t think you’ll be able to repay.

Renewing or rolling over a loan

Some lenders offer rollovers and/or renewals if you are unable to repay on time. These allow you to extend the amount of time your loan is for. When renewing, you take out a new loan for the entire amount. With a rollover, you pay off the interest earned up until that point and the loan basically starts again. In both cases you will end up paying more in interest because of the longer time frame.

What it means for credit ratings

Short term loans show on your credit rating and if a lender searches your credit rating to check if you qualify, this may leave a footprint. If you repay them on time, it usually doesn’t affect your credit rating, but if you make late repayments, it can lower your rating.

Bear in mind that your credit history is also something lenders may look at. Some long-term lenders (like mortgage lenders) may see a need for short-term credit as an issue.

If you wish to find out which specific credit reference agencies have been searched, you can contact that lender to find out. Depending on the lender, calls may be free, or they may be at national or local call rates.

Lenders will be likely to check your credit rating if they accept you. If you would like to find out what credit reference agencies they used, you can contact them to ask. For more information on credit ratings and how to improve your own credit rating please click here

Where to get advice

There are places you can get free advice if you are struggling with debt repayments. You could be in financial trouble if you are regularly taking out short-term loans.  You should take advice in cases where you do not know if you can repay them.

If you are struggling with debt issues, you can contact one of the following organizations:

  • Citizen’s Advice Bureau
  • Government Debt Advice site
  • Money Advice Service.

They should be able to give you some free advice with regards to your position. They could also suggest ways to improve your finances where possible.

Every lender must have a complaint handling process. You will have the opportunity to contact them via writing, email or phone. If you are unable to resolve an issue with a specific lender, you will be able to refer the matter to the Financial Ombudsman Service.

You can contact them on 0300 123 9123 or go to their website at www.financial-ombudsman.org.uk.