3 Month Payday Loans

Pay Day Loans come in different forms and some of the most popular ones are the ones which have an equal repayment option which is spread out over a period of 3 months. These can also be called equal installment loans where the amount of loan to be repaid needs to be repaid in equal installments.

This type of loan can be considered as one of the best forms available as it very clearly states the amount it will debit from your bank account each month and gives you time till your next pay day for you to credit the amount. The additional benefit it gives you is that within 90 days, the amount to be repaid over the next 3 months is an amount that is decided by you and the bank mutually and only that amount is deducted.

Let us look at a representative example for the same:

Let us take that the total loan amount is £200 to be repaid over a period of 3 months. The total amount you will be paying at the end of the 3 months is £298 in 3 equal monthly installments. If you compare the same to 12 monthly installments, for the same amount, you will end up paying £387 with a lower APR. This might be attractive because of the low APR but the amount payable at the end of the year is much greater than in the case of 3 months.

The Current Scenario:

Let us look at the current scenario that these companies are in and what implications it has for the customers. Before we analyze the situation, it is important to make clear that these lending agencies cannot be compared to conventional banks, as they are dealing with a different clientele. Let us look at some industry data and interpret it in an objective manner.

There has been some serious criticism by various consumer organizations against the practices adopted by these agencies but it has not resulted in consumers shying away from the products being offered.

Companies like Wonga have doubled their profits and converted losses into profits of £84 million in just a span of 2 years in addition to doubling the number of their employees. This means that there is an ever increasing demand that is showing no signs of declining in the near future.

Major Players and their growth:

Wonga is known to have reported the maximum number of profits in this category. They have turned their losses into profits literally overnight and have doubled the number of their employees in a span of one year.

In terms of turnover, Lending Stream is known to be one of the fastest growing players in the market. They offer 3 month pay day loans which are known to very popular as well as 6 month pay day loans which have an APR of 4071% which has risen from 3378 in one year. Despite its growth, Lending Stream is known to be one of the very few organizations not making a profit.

The America owned Quick Quid offers loans upto £1500 at an APR of 1734% and is known to turn over their profits from £15 Million to £198 million in a span of one year.

It has been found that a lot of the major banks in Britain are known to invest heavily in this segment and a lot of American companies that do not have access to markets within the US, are investing in UK’s less regulated market.

What this means for a customer:

This is an important consideration for a customer, since he/she should know the growth pattern of these companies and where they are deriving their profits from. This also very clearly shows the demand that is stemming from the public for short term loans. Short term loans are becoming far more popular as compared to the previous years, purely because it states the need to bring the concept of credit to every single citizen. Not everyone can afford loans and the fact there are institutions like these that exist shows the need for such facilities. With this tremendous growth, there is also a simultaneous need to be completely aware of the various financial products offered by these companies and choose only the one which suits you most.

Why 3 month pay day loans are offered by many companies:

3 month pay day loans are given to individuals who have a steady source of income and have been consistently financially stable. These loans are usually offered to people who have a genuine emergency and do have the sufficient cash at the time of a crisis. These individuals usually have a good credit history and have known to be consistently regular with their overall loan repayments.

Similarly, 6 month pay day loans are also offered with the same idea. Someone with a consistent job and with a stable source of income would be an ideal candidate for this kind of loan.

Even though the age to borrow a pay day loan is only 18 and in some companies, 20, the affordability analysis team is extremely careful with their selection of the loan amounts and ensures they give a concrete reason as to why their loan is rejected, in such a case. People who are borrowing loans to supplement their income are usually given the least time period, so that the risk for the individual also becomes lesser.

Overall View:

There are different types of loans being offered by various companies and it is important to properly consider which one you will be most prepared to pay for. Even though there might be a crisis situation, it is essential you do a thorough check of your financial situation and think ahead to see if you are in a position to be able to repay the borrowed amount. The selection of the lending agency in such a case also makes a huge difference, as it guides you through the entire process in a way which ensures minimum risk.