Payday Loans Explained

What are Payday Loans?

A Payday loan is a short term, high interest loan that you pay back on your next pay day. Typically a Payday loan is available for amounts up to £750. Payday loans are for people who need money now. Payday loans should be used as a last resort if you are in financial dire straits or faced with a one off unexpected financial emergency.

Many Pawn shops and Payday loan shops offer a cheque cashing facility where you write a post dated check and you receive cash minus the lending fee. To apply for an online Payday loan you need a bank account and regular income which you don't need to cash a cheque. Payday loans online are also known as instant pay day loans, cash advances, same day loans, Payday advance loans, cash till Payday loans or small unsecured loans.

UK Payday loans are available irrespective of credit history. Payday loans are available with no credit check and most Payday loan lenders only require your name, address, date of birth and work and payroll details so guaranteed Payday loans are out there if you have sufficient income and a bank account. Even if you have a poor credit history, bad credit Payday loans are available and if you have no credit history no credit Payday loans are available from UK Payday loan lenders and Payday loan stores.

What are the benefits of a Payday loan?

Payday loans are a short term borrowing solution for immediate financial problems. If you are going to default on a mortgage or loan payment then you may be charged a late payment penalty by your lender and be charged a late payment fee by your bank. These late payment fees could add up to a significant sum. The interest charged on an emergency Payday loan may be less than the late payment fees and the Payday loan could save you money, as well as protect your credit rating.

• Avoid late mortgage payment charges
• Avoid the cost and embarrassment of bouncing cheques
• Protect your credit rating
• Pay Final Demand Bills
• Sort out an unforeseen emergency now

What are the downfalls of a Payday loan?

Payday loans are not a viable long term solution for financial difficulty. You may be charged additional fees if you need to extend the loan term and the outstanding amount could soon spiral out of control towards bankruptcy. Payday loans have been criticised for the exorbitantly high interest rates that are charged. Rollovers are common, some even claim that the majority of people renew their loan, leading to even higher interest rates. The lifeline that you use for that one time emergency can all too often become habitual. It's so easy to apply for a Payday loan but it is not good financial advice to apply for a Payday loan to grab a bargain before the sales are over.

Payday loans have more than doubled since 2007 with more and more Payday loan companies entering the market. The growing popularity of Payday loans may be seen as a consequence of the credit crunch and it could be argued that unsustainable levels of personal debt are only being fuelled by the number of Payday loan stores and online Payday loan lenders.

Payday loans are not ideal for all situations it's all a case of weighing up the pros and cons.