What are Payday Loans?

Payday loans are sometimes known as “wage day advances” or “fast cash loans”.  They are, as their name suggests, intended to tide a person over until their next pay day.  Therefore, they are generally only intended for two weeks to a month and are subsequently fairly small – between £80 and £800 is usually offered.

 

Applying for a payday loan is very easy: most payday loan providers operate an online service.  The applicant simply goes on to their website and fills out a short, easy-to-understand form and receives a loan decision almost instantly.

 

Next, they provide their bank details and receive the loan usually later the same day or at the latest the next day.  They then have around a month to pay the loan back.

 

Payday loans are aimed primarily at people who have had problems receiving credit through so-called ‘mainstream’ avenues, in other words from regular banks and lenders.  This might be thanks to a low credit rating, County Court Judgements (CCJs) or a black listing. 

 

Payday lenders generally do not carry out credit checks on their clients and do not ask for much in the way of personal details.  Most applicants simply need to prove the following:

 

-      Over 18

-      UK resident

-      Regular income (this carries a minimum, usually £300 to £750)

-      A working bank account

 

Payday loans are great for emergency situations where money is desperately needed, but some people criticise them for their rather high interest rates.  Indeed, many payday loan lenders charge higher interest rates in order to take into account the higher risk that the applicant poses to them.