The Most Looked For Loan (Payday Loan) DOESN’T EXIST anymore!
(Plus The BEST alternative)
Short-term loans like payday loans were first created to help people get by until their next paycheck.
The funds were deposited immediately into your bank account, and on your next payday, you repay the full amount plus interest and fees in one single instalment.
However, that old-style single instalment payday loans DO NOT EXIST anymore.…
We are here to explain The Best possible alternative. And how do we know it is the best? Well, it was created as a better replacement.
Let us explain it like this:
Do you remember Blockbuster? It had the DVD rental market sewn up. Then along came a new kid on the block called Netflix. Now it holds the market. It was lights out for Blockbuster.
You see, payday loans were rolling in cash.
However, it had some disadvantages and some payday lenders abused the policies heavily, which made the regulator bring in a new set of regulations. The old style payday loan got changed to The HCST loan. Like the Netflix situation, it was also lights out for payday loans.
The HCST loan actually means “High Cost Short Term” loan.
With payday loans, you could borrow a loan until the next payday check, hence the name. But now, you can borrow money for extended periods, and repay it over a period of 3 to 12 months.
Don’t get carried away… All of these loans share the characteristics of being expensive, short-term, and frequently for smaller sums. These are unsecured loans with an annual percentage interest rate (APR) of 100% or more.
If you can’t afford to repay the loan on time, a payday loan will cost you a lot of money and can even make your situation worse. Before selecting one, you should consider it carefully.
Like its predecessor, the same rule applies to the HCST loan.
The payday loan is basically the same as the HCST loan, but worse… The real difference apart from the name is the length of the repayment period.
Research by the financial watchdog of the United Kingdom, the Financial Conduct Authority (FCA) shows that 37% of payday loan borrowers and 29% of short-term instalment borrowers are aged 25-34.
Let’s dig a bit deeper into those payday loans, that way you will find out everything about those new HCST loans too. We’re killing two birds with one stone.
How much do payday loans cost?
Like everything in today’s world, even payday loans have limits.
Payday loan rates are legally limited by the Financial Conduct Authority‘s standards (FCA).
The maximum interest and default fees that can be imposed on you are regulated by law.
No more than £24 in fees and charges will be added to each £100 borrowed for a 30-day loan. The greatest default fees that can be assessed against you if you don’t make your payments on time are £15 + interest.
A total cap ensures that you will never have to repay more than double what you borrowed:
- Interest and fees must not exceed 0.8% per day of the borrowed amount.
- If borrowers default, fees must not exceed £15.
- Borrowers must never pay more in fees and interest than 100% of what they borrowed.
Same thing applies to the HCST loan.
Benefits vs Risks of the HCST loans
What happens with your credit scores while borrowing payday loans?
There are several benefits of maintaining a good credit score, such as having the benefit of being offered a lower interest rate on the loans that one opts for. A good credit score helps an individual to save money on a wide range of services. LoanTube has listed a few tips to help maintain the credit score to be fit and in shape:
- Keep paying bills on time. Any bill, if unpaid, could wind up on your credit report.
- Refrain from applying for new credit as multiple credit checks also impact the ratings.
- Know your credit report inside out. A single error can lead to a drop in the score.
- Manage your debt efficiently and responsibly. Lower the debt, higher is the credit score.
What about repeated payments?
Many payday lenders will request that you set up a recurring payment before granting you a loan (aka continuous payment authority – CPA).
This enables them to immediately withdraw the amount you owe on the due date from your bank account using your debit card, which means you’re basically at the mercy of your lender.
Although it can be helpful, this is problematic. You might need more funds in your bank account to cover expenses like your mortgage, rent, or other necessities like food and heating. Additionally, it can cause you to exceed your overdraft limit and encounter bank fees.
Ask the lender if there are any other ways you could assist if you don’t think a CPA will offer you adequate control over your funds.
You can end a CPA at any moment, but you will still owe the debt and need to find another way to pay it back. So there is no escaping.
Because of this, you need to stop and think carefully before borrowing a payday loan or the new version, the HCST loan.
Other options for repayment:
You need to know your alternative options and how they operate before you set up recurring payments for a payday loan.
Taking a high-cost loan can often be very catastrophic in some cases, which is why we urge you to think carefully before taking one out.
Direct debit or Debit Card
A Direct Debit Instruction is a document you sign to authorize someone else to withdraw money from your bank account. The Direct Debit Guarantee Scheme covers you if a payment problem occurs. Direct debit payments may come in a variety of amounts.
As mentioned in the previous sections, this characteristically occurs regarding payday or HCST loans.
By signing a form outlining the amounts and due dates for the payments, you authorize your bank or building society to make recurring payments to another party. Standing orders, instead of direct debits, are for a certain sum.
The 14 day Cool-Off period:
You have the first 14 days to change your mind about the agreement at any time.
Only the interest on the credit you used must be paid. Any additional fees must be reimbursed to you.
You sometimes need a helping hand when you make a mistake, and this feature is one of them.
Don’t take a payday loan or a HCST loan until you read THIS…
How to escape the payday loan trap
If you are having trouble paying back a payday loan, the lender may try to lure you with a postponement, roll over, or even another loan. A lot of traps lead people to take out unnecessary loans.
If you wish to escape those traps and sharpen your financial management skills, this is the section for you.
Now, let’s get into some of the payday loan traps.
You can only receive a maximum of two rollovers from your lender. Each time they offer you one, they must also supply you with a page of material with information about sources of free debt advice.
If you’re having trouble paying back an old debt, rolling it over is a perfect solution. However, because you’ll have to pay back more in interest and other costs over the longer term, it might cause issues soon.
You might find it challenging to pay for the necessities as a result.
Payday lenders promote their loans as a solution to any cash flow problem. However, a payday loan is probably not the best option for you if:
- You intend to use it to settle other loans.
- You already have one or more payday loans.
- You’re unsure that you’ll be able to repay them on time, and you want to use them to cover expenses like nights out, new clothes, or concert tickets that you don’t need and can’t afford.
Use this method only if you are in a tight spot with debts:
Do you have trouble paying your debts from credit cards, loans, and other sources? Then you can consult a debt advice agency for free, private advice.
The advisor can negotiate with the people you owe money to and can assist you in getting your finances back on track.
This can enable you to avoid turning to more borrowing by giving you the time you need to pay off your debts.
Other sales-y tactics some lenders use to lure you in and take your money:
- Consider your repayment options carefully before taking out a payday loan.
- Evaluate if the payment plus interest will be accessible if you are short on funds this month. Do you intend to make more money? Or will you need to reduce your spending significantly?
- Think about whether a loan with monthly payments would be more beneficial for you.
- Check if the Financial Conduct Authority oversees the lender before applying for a payday loan (FCA).
Before we carry on, read this statistic from the UK
- 75% of UK adults have had one or more consumer credit products or loans in the last 12 months.
- 3.1 million UK adults had one or more high-cost loans in the last 12 months.
- 3.6 million UK adults are borrowing from friends and family.
- 0.1 million UK adults are borrowing from unregistered lenders.
Now, let’s get into it…
Payday Loans – No Credit Check
Now, you’ve probably seen those advertisements that offer you no credit check loans or other “fairy tail offers”. This is extremely dangerous, and you should avoid it at all costs; please be careful!
“Why is it dangerous,” you ask yourself… Well, the Financial Conduct Authority has strict requirements for payday lenders. They must check your credit score before they consider lending you money.
They perform a soft credit check on you before making their offers and a hard credit check before sending you money.
Last but not least – THERE ARE NO LICENSED/LEGITIMATE LENDERS OFFERING PAYDAY LOANS OR HCST LOANS WITH NO CREDIT CHECKS IN THE UK
Now you can escape those traps and avoid leaving money on the table.
Payday loans require a lot of thinking from your side. Heck, taking any loan requires researching and finding the best possible offers with your credit score.
With LoanTube‘s loan comparison, you can decide which loan is right for you by comparing offers from our lenders. It doesn’t matter if it is a payday loan or any other type of loan, comparing loans is often the smartest thing you can do when applying for a loan.
Although we can’t guarantee we’ll find you a lender, you really do have better chances of finding a suitable loan with us because we work with multiple UK based lenders.
How does it work? Our proven state-of-the-art computer system compares real-time offers made directly by payday lenders. This is all done in real-time, and once we’ve got all the quotes, we present all these offers with their terms and conditions to you, as the same will help you make an informed decision. And all of these at no extra cost.
It is a simple 3 step process that is insanely fast, it lets you get your loan and check your eligibility rates in minutes. With us, the rate you see is the rate you get, and our soft credit score checks DO NOT HARM your credit score. It is completely safe.
To start your application for a payday loan, please click here. Remember that our service comes at no charge to you and that you don’t have to accept any of the quotes we provide you with if you don’t like them.