A Wage Day Advance is a short-term loan that you agree to pay back on your next payday, or short monthly instalments.
You may be asking, what is a wage day advance?
The loans are typically for small amounts, between £80 and £750, but there may be restrictions on the amount you are permitted to borrow if you are a first-time customer.
Wage day Advance loans were introduced following new FCA regulations that protect against money lenders charging unfeasible interest rates on short-term loans.
It is possible to find lenders that don’t charge penalties on loans if you are able to pay the loan back early. The best option is to take a loan out for a longer period than a short period of say a few weeks.
By definition, it is more affordable to spread payments across two monthly instalments than agreeing to a loan which you have to pay back in a single lump sum payment.
If the lender allows you to spread payments into monthly repayments, it is more manageable and helps you avoid falling into arrears.
How do wage day advances work
Let’s give you a real-life example. Say your pipes develop a leak. You have already paid the utility bills and don’t have enough money left from your wages to cover the repair costs.
A Wage Day Advance loan enables you to borrow the money to pay the plumber and restore running water to your home. For the sake of argument, let’s say the repairs cost £200.
You expect to get paid on the 27th of the month. Today is the 10th and the plumber wants paying. He is not prepared to wait until the end of the month as he needs the money to feed his family.
A wage day advance will allow you to lend £200 on the understanding you will repay the loan in 17 days time when your wages have been paid. Your total repayments would amount to £235.20.
However, you can extend the loan several days or over two months. This will give you some breathing space in case your wages are not paid on time, or if the loan is more than you can afford from one wage packet, you can break repayments into smaller quantities.
If the latter option is more appealing to you, look for a company that offers a policy that does not charge additional rates for a two month repayment plan, like Money Tree UK.
Now we have explained what is a wage day advance, here is some more useful information.
Extending a Wage Day Advance loan
Wage Day Advance loans are only advisable for short-term loans. If you need to borrow more than the £750 FCA limit, there are plenty of other affordable options.
Extending repayments on Wage Day Advances are allowed over short term periods, typically two months, but often at the lenders discretion.
If you are unsure if additional fees will be incurred for deferred payments, don’t take out a loan online without confirming the repayment plan with the loan company.
Wage Day Advances help over forty thousand people a month in the UK to manage their finances, and in the event of an emergency, help them face those unforeseen parts of family life.
Hopefully that has explained what is a wage day advance, if it hasn’t and you’d like more information, please feel free to contact us.