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What Is a Payday Loan?

April 04, 2012 | Comments: 0 | Views: 70

Payday and short-term loans are a type of credit typically used by people who are facing a temporarily difficult financial situation. Loans normally range from between £80 and £1000.

They are an alternative to borrowing money from a bank or building society, where you would normally have to answer a long list of questions and provide detailed personal and financial information as well.

Payday and other short-term loans can be used for almost any purpose. The most common reasons are to cover the cost of car and household appliance repairs, travel expenses, avoiding overdraft fees and other charges and to pay unexpectedly high bills.

A typical payday loan works on the basis that when a person takes out the loan it is repaid on their next payday. So most loans are between 1 to 30 days in length and the loan amount and the charge (Interest) is automatically withdrawn from the person's bank account on the agreed payday date.

Payday loans are a relatively new concept in the UK but are the fastest growing method of borrowing in the world. Already, over 4 million people in the UK, from all walks of life apply each year and the number is growing all the time.

Applications are made online and most payday and short-term lenders work on a 24-hour basis, 7 days a week. Potential borrowers receive an almost instant decision about a loan application and the funds are transferred to their bank account the same day or the next bank working day.

Before you take out a payday or short-term loan visit a number of companies' websites so you can make an informed choice about which lender is best for you.

Everyone faces unexpected financial emergencies from time to time but before considering a payday or short-term loan think about what you need the money for before applying and make sure you budget to repay the loan.

A payday or short-term loan can be a practical option for someone facing a temporarily difficult financial situation.

The minimum requirements to apply for a payday or short-term loan are:

  1. You must have a bank account that accepts direct debits. This includes basic bank accounts that do not come with an overdraft or debit card.
  2. You must be at least 18 years of age.
  3. You must be a resident and be eligible to work in the United Kingdom (England, Scotland, Wales or Northern Ireland).
  4. You must be employed and receive a regular Salary.
  5. You must have your salary paid directly into your bank account.
Source: EzineArticles
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