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All You Need To Know About Applying For a Text Loan

February 16, 2012 | Comments: 0 | Views: 126

With the financial squeeze affecting more people throughout the country, payday loans have skyrocketed in popularity because of their ease of access and simplicity.

A more recent addition to the payday loan family is the text loan - an even more convenient method to get access to cash when you need it the most.

Text loans are a type of payday borrowing and should be approached in a very similar way. They are certainly not ideal for long-term financing or for careless uses and committing to too many, or failing to repay them on time can result in debt.

Nonetheless, for all those times when the bank balance simply just won't stretch until payday, or when a sudden expense comes up, a text loan provides a solution.

This type of borrowing must be set up beforehand so it can be drawn upon when you need it the most. It's therefore worth considering when you are going to need this sort of credit - much like planning an overdraft on your bank account.

To be approved for a text loan you have to first sign up, a step that is usually completed online. A history of a bad credit score is not normally an obstacle to getting accepted but you have to be able to afford the repayments. Lenders generally request a regular stream of income of a minimum of £600 per month and also a bank account with an active debit card.

If you are given the thumbs up you will be provided with a personal identification number and whenever you need to access the money, you just text the loan provider with details of how much and over how long and they will transfer the cash to your account, often within a few minutes.

Once you have repaid the loan, it is easy to borrow again and often loan companies will raise the available credit for those who have demonstrated themselves to be trustworthy customers. Nevertheless, this type of borrowing is created specifically for small amounts and may be limited to no more than a few hundred pounds at most, despite of your credit reputation and repayment history. The loan term is also likely to be very short, generally just one to two weeks at most, even though some firms provide periods of up to 30 days.

Although this form of financing is definitely hassle-free there are some disadvantages. Since the lending policy is much more lenient than main stream banks, you are very likely to be charged a higher annual percentage rate - usually around 4400%. On the other hand, some loan providers argue this is a wrong method to measure their costs due to the short-term nature of the loan.

Some companies also charge customers a registration fee but this is certainly not standard across the industry. Many lenders offer free sign up and acceptance so that the credit facility is up and running without cost if you want to access it.

Also, it is crucial that you make sure you repay the loan on time as extra fees will be applied for anyone who is late and these can be hefty. Most firms take details of your debit card when you sign up to enable them to simply debit your bank account when the repayment is due.

Text loans are quickly becoming as common as using an overdraft or a credit card for short-term financing needs but before going ahead, you really should ensure you fully understand the rates which apply. Comparing loan providers to find the best deal is also strongly recommended.

To find out more about text loans and text loan lenders use our text loan comparison tool.

Source: EzineArticles
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