Workers have given up standing in the queue at their banks when it comes time for quick loans, instead opting to take out short term loans online in order to meet their financial needs.
It turns out that workers have lost patience with traditional lending institutions when it comes down to securing fast loans. In fact, one provider of online loans reported that 200,000 loan applications were made over lunch breaks, which was two times as many as 12 months ago.
Decisions on whether or not to grant an applicant a loan are near instant, as the average amount of time that elapses between being approved for a loan to receiving the funds in your bank account can be as little as seven minutes. Many lending providers can offer maximums of £400 or more for a loan with a term of 30 days.
The downside is, of course, the high interest rates associated with these unsecured loans. Since you can secure short-term finance without a credit check, many providers charge rates upwards of 4,000 per cent APR, which can lead to a repayment of £136 on a 30 day loan of £100.
Industry experts say that these rates are comparable to the use of an unauthorised overdraft, as many traditional banks will charge you close to the same on an overdraft of £100. However, the same cannot be said for authorised overdrafts, which are much less expensive when it comes to fees – one expert said a typical charge could be as little as £1.35.
Payday advance lenders will typically bill your debit card for the amount due once the 30 day time period is up.