If you need a short term loan it is vital to consider all of the options and make a fully informed choice when looking to apply for a short term loan. Compare short term loans here.
Short term loans are often known as payday loans because they are generally needed when payday comes around and you realise that it is not going to be enough to get you to the end of the month or week. It’s here that payday loans can provide a really valuable option on keeping your cash flow in check and ensuring that you have money available for emergencies or to ensure bills and other commitments are met.
Remember. There is a wide range of other borrowing options you should compare before looking at a short term loan or a payday loan. Consider some debt consolidation in a larger personal loan which, provided you manage your finances correctly will enable you to resolve your finances in the longer term without getting into a potential cycle of debt and borrowing and repaying payday loans including, what can sometimes be higher interest rate payments.
Already know that a payday loan is right for you? Check out Moola Short Term Loans here. Moola loans offer loans of up to $5000 with a loan term of up to 368 days. The turnaround time with Moola is very fast and the loan usually is in your account within the same day so if you need to request a loan fast than Moola may be a suitable choice of payday loan. Visit Moola to compare payday loan rates and terms.
Is a payday loan right for you?
If you are looking to compare payday loans then chances are you are in a position where you need to get a fast, quick loan as soon as possible. This is where payday loan companies can provide a very valuable service. However, as with all borrowing, there are a variety of potential risks and issues to consider before you go ahead and apply for a payday loan.
Here at Money Compare, we have outlined the main positive and negative points associated with pay day lenders and short term loans.
Payday loans – Advantages
- Get money in your account quickly. Payday loans are often able to transfer you money within an hour or two
- Borrow small amounts. Payday loans let you borrow from as little as $100 so they can be good for short term needs and making the ends meet when penalties etc may be higher.
- Quick and simple application process. As loan sizes are generally smaller and lenders are looking to loan money quickly and efficiently the sign up and application processes are generally very quick and simple when applying for a payday loan.
- Bad Credit Loan option. Even if you have a poor credit rating you can still apply for a payday loan. As long as you can prove that your outgoings are under control and you will be able to make payments you have a good chance of being approved for a short term loan even with a poor credit rating.
- Visibility of fees. The way that payday loans are structured means that you can easily tell exactly how much it will cost to pay back your loan
Payday loans – Disadvantages
- Expensive default fees. Should you be unable to pay back your payday loan you WILL be charged for it and the fees are high. Being unable to repay your payday loan results in significant penalty fees which dramatically increase the total amount owed.
- Higher interest rates. The short term loan market by its design is focussed on short term lending. That means there is less time for the lenders to make money and as such, they charge a higher premium in the form of establishment or monthly fees in order to generate their income and return. In short, a short term loan charges higher interest than a ‘standard’ personal loan. Consider a personal loan as an alternative.
- Direct Debit dangers. Unless you are careful with your money you may have some issues when it comes to paying back the payday loan via direct debit or automatic payment. As a general rule, many payday loan providers require you to pay back a lump sum on a certain day, normally payday, meaning unless you plan very well you may be left caught short on other bills.
- Negative impact on your credit rating. As with all loans and borrowing, if you don’t make the payment or repay the loan it will impact on your credit rating making further borrowing harder.
- The cycle of debt. Payday loans come with a specific expiry time and you may be tempted to pay back the loan with further borrowing… building up more debt to clear the old debt. Far from ideal and once in a cycle of debt it can become very hard to get out of.
Apply for a payday loan. What do you need?
If you are this far down the page then it seems that you are comfortable with the details, advantages and disadvantages that surround an application for a payday loan. So if you are ready to apply then this is all you need to know about payday loans and their eligibility requirements in New Zealand.
The main points involved in eligibility are outlined below and it is also important to know that whilst you may meet the eligibility requirements it is not a guarantee that you will be approved for your payday loan.
Criteria required for a payday loan
The criteria for a payday loan does vary from lender to lender and if you miss some of these criteria you should compare payday loan lenders and see the specifics. However, as a general rule, the following criteria can be expected.
- Aged 18 years of age or older
- Have an income that will enable you to meet the payday loan payment requirements
- Be employed and be able to demonstrate a regular income (or if unemployed sufficient benefits)
- Show regular salary payments coming into your bank account on either a monthly, fortnightly or weekly basis.
- Prove that you are reliable in your current financial situation if you have previously suffered from bad credit or defaulted on payments.
Legal Documents for making a payday loan application
Again, this varies by individual lender but common documentation is as follows:
- Prove your identity – usually a driver’s licence or passport
- Internet banking details or bank statements from recent months
- Proof of salary in the form of up to three recent payslips
- Proof of address via a utility bill such as electricity, gas etc. A mobile phone bill may not suffice.
The types of lenders that offer short-term loans or payday loans are different from the usual banking institutions and as such their application and criteria are also different. The payday loan can usually be approved within a few minutes and the money in your account on the same day. Applications are mostly taken through the internet or via apps such as that offered by Moola.co.nz.
Compare Payday Loans – The key points to consider
Now that payday loans are increasing in popularity there are more and more providers present in the New Zealand market and this means there are now options for borrowers to consider and compare when looking to borrow money on a short term basis from a payday lender.
The key points to consider when comparing payday loans are as follows:
- Establishment Fees. This is straight forward. Each payday lender will usually charge a one-off establishment fee. This is a fixed price for setting up the initial payday loan and a dollar value that is simple to compare.
- Interest Rates. Again, simple to compare. The higher the interest rate the more money you will have to pay back to the lender. When you compare payday loans look for the lowest interest rate payday loan and be sure that you also
- Early repayment penalties. Self-explanatory. Should you pay back your payday loan earlier you would not want to be penalised for doing so.
- The reputation of the lender. In a market such as short term lending, some companies look to profit off of desperate individuals. At Money Compare we strongly recommend that you compare payday lenders that you have heard of or who are recommended by friends, colleagues or independent sites such as this. The payday lenders that rely heavily on their brand such as Moola or Save My Bacon are much more likely to behave appropriately when it comes to lending money.