Payday Loans – An Introduction

Article by Gill Critchley









There are some people who don’t want or need a full loan but they are in need of some money before their next pay cheque. The ideal type of loan for this situation is a payday loan.

For those that are in need of a bit of extra cash but either doesn’t need that much or who aren’t prepared to put their house up as security for secured loans, a payday loan can give them that freedom.

The way that payday loans work has been compared to a pawnshop. When somebody took an item into a pawnshop, they would receive less money than that item was worth and when they went back to retrieve the item they would have to pay the full asking price. This is similar for a payday loan, but the whole process is a lot quicker and is often conducted online.

Therefore, payday loans are a way to get money fast. Almost anybody can apply for these loans, as long as they are over the age of 18 and a UK resident, you must also have been employed for at least three months.

The amount of money that you can borrow will depend on how much money you make, the amounts are typically around the areas of ?50 and £800 if you are quite a high earner.

Payday loans also don’t require a credit history check or a background check, in fact, the most that lenders will usually ask you for is proof that your salary has been going into your bank account. Lenders won’t ask the reason for you needing the loan and you will usually get the money in your bank account within a day.

There are several lenders who offer the loans and therefore many options. If you are interested in applying, all you need to do is find your chosen lender on line and fill in the form to make sure you are eligible.

When it comes to repaying payday loans, the rules are simple; you will repay the loan on your next pay day. The interest accumulated on the amount borrowed is added to the loan amount and you will them give the lender a post-dated cheque for that amount, or, if you have agreed to it, the money can come straight out of your account. If for some reason you need to extend the loan period, this will mean additional fees which are either charged as a percentage of the amount borrowed or a fixed fee per loan. It is important that you find out before taking out the loan what your lender will do in this situation.

The thing to watch out for with payday loans is the fee. It is important to pay the money back promptly; otherwise, the end amount could escalate very quickly. The interest rate that is charged for payday loans is very high indeed and can reach figures as high as 300 per cent. This means that it is not ideal to manage your finances with the help of these loans; however, they can be very useful for getting yourself out of some financial difficulty.

As long as you don’t borrow more than you can pay back once you have been paid, then you shouldn’t have any difficulties. Always remember that the loan companies are in it for the money and so won’t hesitate to get a collections agency involved which could do real damage to your credit rating.

For those that are in need of a bit of extra cash but either doesn’t need that much or who aren’t prepared to put their house up as security for secured loans , a payday loan can give them that freedom.

Almost anybody can apply for these loans .

The thing to watch out for with payday loans is the fee.



About the Author

Gill Critchley is a UK based author with experience within the financial industry.










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