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What is a Payday Loan?

A payday loan is something that can help out those people who are suffering with short-term cashflow issues. There are many situations that you might find yourself in where you need help with some money until you get to your next payday. Let’s take a look at the payday loan, how it works and how it could be the perfect option for you at this time of financial need. If you need to find a payday loan today there are some things you need to know first.

There could be any number of reasons why you want to take out a payday loan. It might be that you’ve recently been handed a bill that you weren’t expecting, and it is larger than you have the funds to currently pay it off in full, other people might have a broken-down car or white goods appliance at home and need some help in getting things back up and running now, as their payday isn’t due for a week or two more.

How does a payday loan work?

A payday loan is a loan of a short-term nature. These types of loans are designed to help people who are facing financial problems of an immediate nature, with small unplanned and unexpected expenses the main reason behind a payday loan being required.

How much money can I borrow?

A payday loan in most cases will range from an amount as small as £50, up to around £1,000. The idea is that it is a small enough, fast loan, that you have access to almost immediately and that helps you get through whatever financial problem you are facing before your next pay cheque is used to pay off the payday loan in full.

Is a payday loan right for me?

If you have poor credit and you have had bad luck applying for loans through your high street bank or traditional lending streams and you need some help, a payday loan is the right option for you.  A payday loan will have a much higher interest rate than other forms of credit that you might have taken out in the past, with APRs advertised into the 1000s per cent in some cases. Do not let this scare you off as a payday loan is meant as a loan that is paid back on your next payday. A representative APR of 1500% for instance, will include all fees and added costs, and be representative of an annual rate. In the vast majority of cases, a payday loan will only be applicable for a few weeks, up to 4 or 5 weeks at most.

How much time do I have to pay back a payday loan?

The time you have in which to pay back a payday loan will depend on the specific lender, with some offering more flexibility than others. Payment is made via direct debit, and a successful applicant will have been thoroughly vetted to ensure that they will not be placed in further financial trouble by taking out a payday loan. Those who are late with a repayment or miss it completely are likely to be hit with interest and charges for the offence. If you are not careful this can add up quite quickly.

What other eligibility criteria do I have to meet?

There are only a few eligibility criteria for applicants of payday loans. To be successful you have to be over the age of 18, have a bank account and be in some form of employment. Applicants with a low credit score are less likely to succeed than those with good credit scores, but there are payday loan providers that can help those with an adverse credit history.

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