No-refusal payday loans, as the name suggests, are loans that involve guaranteed approval. It asks how it is possible to offer a guarantee when a lender has yet to analyse your credit report and repaying capacity.
Unlike other emergency loans, payday loans do not involve a credit check. When you apply, a lender will make a lending decision based on your repaying capacity. These loans are the most convenient funding source, as you do not have to lose your credit points due to hard credit inquiries.
Since a credit-check step is eliminated from the processing, you get approval as quickly as possible. These loans seem very affordable as you can get rid of them by paying the whole of the money at once on the due date.
Though these loans seem affordable, they can prove to be a very expensive deal. First off, a lender can lend you money despite checking your affordability. Chances are you fall into a debt cycle. Further, you are supposed to pay back the whole amount within a period of 14 days.
You will likely fall short of cash again and borrow money from a direct lender. This is when the cycle begins to continue, and you eventually end up in an endless cycle of debt.
Does that mean no-refusal payday loans are not safe? No, not at all. You need to carefully analyse your borrowing capacity, so you do not trap in debt.
How to make no-refusal payday loans safe and more affordable
If you are looking to apply for a no refusal payday loan, you must ensure you can quickly repay the debt. As long as your budget allows you to clear the whole debt without compromising with other expenses, you should not be frightened of applying for these loans.
Here are the tips to bear in mind to make these loans safe:
Choose a reliable lender
There are various payday lenders, but not all of them will be suitable for your credit profile. Though neither of them runs a hard credit check, there are still some factors that can make or break it. Getting an affordable payday loan is not a cinch.
Since a lender does not involve a credit check, the interest rates will likely be much higher. You should try to choose a reliable lender who lends money at the most competitive interest rates. Some payday lenders do not charge processing fees, which makes it more affordable.
You can get familiar with a lender’s trustworthiness by doing some online research. Google reviews are the best way to ensure whether you borrow money from a reputed direct lender.
You should also verify social media platforms to see what kind of reviews people have written for the lender. Try to get information about their product features from their websites. For instance, some lenders get money back in a lump sum, while others allow instalment payments. Of course, the loan with instalment payments is more manageable.
If you have any doubt about the processing or functionality of a loan, you should choose a reliable lender.
Borrow what you can afford
As payday loans are incredibly convenient, it is possible that you become tempted to borrow more money. Remember that these loans are quite expensive, so you should not borrow a large sum of money.
The maximum amount of payday loans is not more than £700. In rare cases, it goes up to £1,000. Even if you borrow £100, you should check whether you can repay the debt. It seems very convenient to pay back £115 (£100+£15) after the end of the term, but you often forget that when your budget did not have wiggle room to pay £100, how would you be able to pay off £115?
Therefore, it is crucial that you do not make a superficial decision. Paying off £115 seems easy, but the fact is that they could take a toll on your finances. You should use online loan calculators to determine how much it would cost you.
You will get to know the estimated amount you will have to pay in total. In addition, you are supposed to check your bank statement to see if you can put up with this additional payment. There is no point in borrowing money if you are to cut back on another recurring expense to pay it because otherwise, you will end up borrowing again and again.
People who are living paycheque to paycheque should avoid taking out these loans. Otherwise, you will end up rolling over the loan and fall into a debt spiral in the end.
Choose a lender that runs a soft credit check
Payday loans are no credit check loans because a lender does not peruse your credit report. These loans are mainly aimed at bad credit borrowers, so lenders do not bother about running your application.
No credit check loans can carry very high-interest rates because there needs to be clarity about your previous payment history. Therefore, you should try to choose a lender that runs soft inquiries. It means a lender will review your credit report, but no soft inquiries will appear on your credit file.
This will help a lender take stock of your repaying capacity well, and hence they will be able to make the right decision.
To sum up
No-refusal payday loans could be safe if you take them out from a direct lender in the UK, but you need to ensure that you do not borrow more than your affordability. It is always advisable to do up your credit score to borrow money at more affordable interest rates.
Try not to make any other defaults, so the effects of the defaults and missed payments become old. It will not affect your borrowing at lower interest rates if it is old. Consider alternatives to payday loans. They might be more affordable.
Williams Adams is the Senior Content Writer and Loan Advisor at Loansevents. He is passionate about finance writing and has written thousands of blogs for the top platforms worldwide. In more than 13 years of experience, he has worked with leading lending firms in the UK providing various loans. At Loansevents, Williams does the major task of writing researched-full blogs on multiple loans and financial concepts. He has done MBA in Finance in the UK to back his finance skills.
