Bank finance articles and tips

From time to time most of us will find ourselves short of cash and may need to seek out some financial help until payday arrives. In today's economic climate, with rising prices and wages not keeping up with inflation many of us are finding it more and more difficult to make our wages stretch to the end of the month. Many people are seeking payday loans to fill this financial gap. With lenders giving access to easy credit in the past and people finding themselves in debt as they could not manage repayments, lending responsibly has become paramount with lenders pledging to not lend money to people whose financial situation is not suitable, or encouraging people to borrow more than they can afford to pay back.

Lenders are also obliged to lend responsibly through the banking code which is a self-governed set of rules which ensures they do not lend to unsuitable customers who are likely to get into debt. It also includes a responsibility to treat customers appropriately and make sure their financial situation does not get worse as a result of further lending. Part of lending responsibly is to carry out adequate credit checks before authorising a loan. Getting a loan can seem too easy with the convenience of text loans but lenders must still carry out some basic credit checks first. They may not be as thorough for payday loans as they would be for another type of loan but nevertheless, certain criteria are still checked before lending. They will check your credit history, a record of previous and current lending, previously denied applications and your historical ability to repay debt. It will highlight any history of bankruptcy and ensure your application is genuine. These checks can be quick and you could have authorisation for a loan within a day or even sooner.

The reasoning behind these checks is to ensure the safety of both the creditor and the lender. It should provide a level of certainty that the creditor will get paid and the lender will be able to manage the repayment schedule without getting into financial difficulty. If you are applying for a payday loan you should be aware that this type of loan is not suitable for long-term borrowing. If you require money over a longer period you should investigate other types of lending as a payday loan is only suitable for short periods as interest rates and repayment terms are different to that of a credit card or fixed term bank loan for example. If you have a bad credit rating you may be refused, or if the creditor considers you eligible but high risk you may still be able to borrow, but just for a smaller amount to make sure you are able to meet the repayments. Before you take out a loan make sure the loan provider has given you clear and complete information on the terms and conditions of the loan. The APR and any charges should be clearly highlighted so the customer does not face any nasty surprises. Stating the terms and conditions clearly also helps the customer compare loans so they can find the one that suits them best.

Quid24 is offering short-term payday loans and text loans to UK residents. To find out more about text loans visit Quid24.com website.

By Jack Selcit