What is a Day Pay loan
As the name suggests, A pay day loan is a very short term borrowing facility allowing you to borrow money for a short period of time, usually until your next payday.
Pay Day loans tend to be up to a maximum of £500 or £750 and repayment is usually required within 31 days (a month) however some providers will allow more time for the loan to be repaid although you will pay back more in interest.
Keeping your finances in check
We all know how hard it can be to keep our monthly finances in check especially when you have unexpected bills that appear that have not budgeted for. In the past the option to borrow money for just a few weeks had been limited to asking friends or family to lend the money. In some cases kind employers would make cash advances to their staff and then recover the money direct from their monthly salary, however this is becoming less of an option as employers tighten their belts and create internal policies. Borrowing money from friends and family can lead to friction in the relationship as borrowing money is something most of us don’t like to do. Hence the emergence of the payday loan provider.
Loan Sharks
Another option that some people turn to is the “Loan Shark” which is usually an un-licensed individual or organisation that will lend money to customers for a short term basis. Being un-licensed they are not bound by the normal rules and as a borrower you are not protected by the same laws. In addition it is well known that Loan Sharks are not averse to using strong arm tactics if a repayment is delayed which can lead to individuals being put in dangerous situations.
Short Term Loan
Payday loans are specifically designed for a short term financial bridge and should not be used to try and resolve a long term debt requirement. There are many reasons for this, with the most important being that over a longer term the interest rates on a Payday loan are very large in comparison to a more traditional secured or unsecured loan.
Credit Checks
Generally Pay day loans still require a credit check so a lender can assess your suitability for the borrowing and your ability to re-pay the loan, although individuals with a chequered credit history are not always refused as the lending criteria can be more relaxed than larger and longer term loans.
Secrecy
It is no secret that payday loans are used by some people who would like to keep their borrowing away from their partners or family. This is because a payday loan is not a secured facility and there are usually very few papers and agreements to sign (they can sometimes be done online) and authority to apply for the loan is with the applicant.
Quick Payout
Quick payout is a feature found with most providers with some even offering a same day service using CHAPS to deposit the money into the applicants account. This is useful when there is an urgent need for the money and timescales are a factor.
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