D = The main difference between the US and UK payday loan markets (other than size) is that offline loans are still in demand in the US. Moreover, the number of borrowers applying for Payday Loans in the US is four times that of the UK.
At the moment, Payday Loans occupy an important place in the lending market, as it is an easy and fast way to get financing when needed. It is 100 dollar loan that allows borrowers to cope with emergency expenses until the next payday. Millions of people use this type of financing every year because they have no other way to get help, so Payday Loans continue to be popular.
Of course, not every borrower can get a traditional bank loan or credit card, as their credit history can be bad if they previously missed loan payments. However, when applying for a Payday Loan, borrowers know that lenders don’t pay much attention to the borrower’s credit history, so just about anyone who meet the requirements can get financing. That is why in an emergency life situation people turn to such loans and google I need 700 dollars now instead of going to the bank.
Chances are you’ve heard of or applied for a Payday Loan at least once in your life, but your knowledge may still be limited or inaccurate. That’s why below you can learn basic information about Payday Loans, as well as compare loan offers in the US and UK.
What Should You Know About Payday Loans?
According to Daily Local News, the Payday Loan is one of the most popular ways to get emergency funding, as it allows borrowers to receive money in the shortest possible time. But what exactly is a Payday Loan?
A Payday Loan is a simple, short-term type of financing that allows borrowers with bad or poor credit to apply and get money for their needs. It differs from other short-term loans in that it is paid in a lump sum rather than in monthly installments. Based on its name, a borrower will need to pay off the debt with interest on the day of his next paycheck.
These loans are also popular because they do not have a large number of eligibility criteria, so getting approved is fairly easy. Also, Payday Loans are notorious for high interest rates, but since you can only borrow a small amount for a short term, they won’t be as high.
UK Payday Loan Main Information
Surely you know that there are a huge number of Types of Bororrowing in UK ranging from Payday Loans plastic cards to Secured Loans and bank overdrafts. However, the fastest and easiest way to get financing is still the Payday Loan.
Previously, a huge number of lenders provided their services in physical locations throughout the UK, but now many businesses have closed and almost the entire emergency lending market exists online. The lending industry peaked in 2012-2014, before new, stricter borrowing rules were introduced. At the time, the lending market was valued at £2bn, but the easing of rules meant that lenders most often charged extremely high interest rates, as well as incredibly high late fees that were almost impossible to deal with.
However, in 2015, everything changed when the Financial Conduct Authority was brought in to solve the problem. After that, the market for Payday Loans not only declined, but half of the lenders stopped providing their services altogether. Under the new FCA rules, lenders were now required to be as transparent as possible with borrowers, as well as limit the overall interest rate to twice the original loan amount. The lending market continued to fall as the FCA began encouraging those borrowers who demanded compensation for mis-sold loans. That is why many of the UK’s largest creditors go into administration.
For now, people can still get Payday Loans in the UK but most often it is offered online. Loan amounts can vary, and most often range from £50 to £500-£800, but some lenders also offer larger loan amounts. Payday Loans are most often repaid within a month, but you can also borrow for longer periods, typically three months or more, and pay off the debt in monthly installments. As already mentioned, at this time the value of any Payday Loan is limited by the laws established by the FCA. Thus, if you take out a loan for 30 days, you will pay no more than £24 for every £100.
US Payday Loan Main Information
It’s probably worth noting that the main difference between the US and UK payday loan markets, apart from size, is that there are still lender shops in the US that are in high demand. Despite the fact that many US lenders also offer online loans, stores do not lose their popularity. It is also worth noting that there are four times as many borrowers applying for Payday Loans in the US than in the UK. However, it is important to take into account the fact that the number of US residents is five times greater than the number of those living in the UK.
Also, at the moment there is a big difference in the number of lenders, because due to the tightening of rules in the UK, the number of lender companies has dropped sharply, which did not happen in the US. However, the US emergency lending industry is also regulated and has certain rules that lenders must follow.
First of all, it is important to note that not all US states allow Payday Loans. They are currently legal in 36 states. The state with the most Payday Loans is California, where there are currently over 2,000 lenders. The rules and restrictions that apply to Payday Loans vary greatly from state to state. Each state has its own limits on what interest rates a particular lender can charge. This is another major difference between Payday Loans in the US and the UK: in the US limits can vary from state to state, while in the UK the same recommendations apply throughout the country.
What’s In Store For Payday Loans In The Future?
As can be seen, in recent years, the rules in the emergency lending market have become more and more stringent in order to make Payday Loans safer for borrowers. The US is likely to see the most change, as the UK has already gone to great lengths to cap interest rates and commissions on Payday Loans. If new restrictions come into force in the United States, it will most likely also be necessary to wait for a decrease in the number of lenders throughout the country.
Speaking of borrowers, they are likely to look at more alternatives instead of rushing in and applying for the first loan that comes along. Borrowers are also now finding Installment Loans a more convenient way to obtain funds.
No firm conclusions can be drawn as to what the fast lending market will look like in the future, but most likely many people will still not be able to cover their needs on their own, so they will have to turn to short-term loans.