2 out of every 100 students take out instant payday loans to help them cover shortfalls in their own personal budgets and to cover emergency expenses, according to the National Union of Students. In London, where the cost of living is even higher, more students take out instant payday loans than anywhere else in the country.
That means that nearly 50,000 students use instant payday loans every year. If you’re considering one for yourself, what do you need to know?
Why do so many students take out instant payday loans?
It’s never been more expensive being a student. And we’re not talking about tuition fees when we say that – we’re talking about the cost of everyday living including rent, food, clothing, and entertainment.
According to one survey, the average student is £277 a month short – over £3,000 every year they’re at university. Nearly one in five students get help from their parents, about one in ten use their bank overdraft, with others looking to credit cards and instant payday loans for much needed assistance when they need to meet an unexpected bill.
80% of students worry about money and nearly half of those students say that their studies have been even affected by financial concerns.
When an emergency bill comes in – like replacing a pair of glasses or the addition of more books to a reading list, many students don’t have enough money left in their bank account to pay for it when they need it.
Do students taking out instant payday loans receive special protection?
Yes. Instant payday loans are a specially regulated sector of the financial market and that means that you receive special protection that other borrowers don’t receive.
Specifically, instant payday loan customers benefit from the following special protections:
• an interest rate cap – you can’t be charged more than 0.8% per day in interest rates by law.
• a fee cap – if you fall behind on your repayments, you can’t be charged more than £15 in fees.
• an overall payments cap – you can’t pay back more in interest and fees than the original value of the loan. For example, if you borrow £150, you’ll never pay back more than £300.
• limit on the number of payment collection attempts – your lender can’t try to take payment from your account more than twice.
• help if you fall into arrears – including free representation on your behalf by an account manager at a debt charity.
Do I need to have a job as a student to qualify for an instant payday loan?
Not always – it depends on the lender. However, you do need to be 18 years old or over, be a UK resident, have a bank account, a mobile phone, and some form of income. With some lenders, this income can include your grant and any part-time work you might have.
What if I have a bad credit rating or no credit ratings?
BestShortTermLoans has relationships with many lenders across the UK and a larger number of them work with customers with bad credit ratings or even no credit rating.
For many students, they’ve never taken out credit cards, overdrafts, or loans before meaning that, when a lender looks at their credit record, there’s not a lot of information for that lender to consider when they’re making their application. If this sounds like you, we can introduce you to instant payday loan companies which are comfortable with that – more on that later.
Will taking out an instant payday loan affect my credit score?
Yes. If you make your repayment (or repayments) in full and on time, there will likely be a positive effect on your credit score as you’ve shown lenders that you can handle finance responsibly.
However, if you miss any repayment or fall into default with the loan, this will have a very bad effect on your credit rating making future loans, credit cards, and overdrafts very difficult to obtain for a number of years afterwards.
Should a student apply directly to a lender for an instant payday loan?
You can apply directly to a lender for an instant payday loan. You’ll get a decision, in most cases, within seconds and, if you need it, the money will be paid into your bank account within a couple of hours.
Should a student apply via a broker for an instant payday loan?
You may also apply for an instant payday loan through a broker. A broker is an introducer who builds relationships with various different instant payday loan companies. Part of that relationship building is getting to know the types of borrowers a lender feels happy working with.
It’s with that knowledge that a broker, on receipt of your details, will be able to send your application to the lenders they believe will be most open to working with a particular borrower. There are over 100 different instant payday loan providers in the UK and using a broker saves you a lot of time and stress in finding the right company for you.
Should I apply for an instant payday loan with BestShortTermLoans?
BestShortTermLoans is a Financial Conduct Authority-licenced broker. The lenders on our panel are also Financial Conduct Authority-licenced.
Only Financial Conduct Authority-licenced brokers and lenders are allowed legally to offer instant payday loans to consumers. If someone approaches you offering to lend you money and they are not Financial Conduct Authority-licenced, there is a chance that you could be dealing with a loan shark who won’t obey the special protection rules we discussed earlier in this article.
BestShortTermLoans works closely with dozens of different instant payday loan companies in the UK. And it’s the strength of our relationships with them which lead them to offer our borrowers the lowest rates and the best terms on their instant payday loans.
When you use us, it takes seconds for us to identify the best loan available to you on the market. If you accept the offer we find you, your money could be with you, depending on your bank, within a couple of hours.
If I use BestShortTermLoans, what charges do I pay?
BestShortTermLoans do not charge you anything. If we find you a great loan but you decide not to take it out, you still pay nothing.
Every time we introduce a borrower to a lender and a borrower decides to take out the loan, we get a “thank you” payment direct from the lender. It’s also important for you to know that you don’t pay any extra for taking out a loan through us than if you went through the lender direct.
To start your application, please click here.