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Payday Loans

What is a Payday Loan?

You must have overheard a lot of people using this term, but do you know what it really means?

Payday loans are cash advances granted for a short period of time. Usually, as soon as you receive your pay check you can repay the Payday Loan installment. They are granted on a short term basis and in small amounts. They are used to sustain your emergency needs and provide an immediate cash advance to take care of your necessities. It is a cash advance against the security of your pay check.

Payday Loans are often called “cash advance” and “instant payday loan”. This loan type is easily and quickly sanctioned as the application process is quick and usually conducted online. Your borrowings depend on the amount sanctioned to you by the lenders. In the UK short terms Loans are provided which range £50 to £1000. Banks sanction the pay day loan amount either based on the capacity to repay or earning capability. The loan amount needs to be repaid on the payday along with the interest due.

Compare Payday Loans

Loan Amount £100 £100 £100 £100 £100
Total Repayable £125 £125 £125 £125 £125
Term(Days) 31 31 31 31 31
% APR 1286.10% 1286.10% 1286.10% 1286.10% 1286.10%
Loan Amount £200 £200 £200 £200 £200
Total Repayable £250 £250 £250 £250 £250
Term(Days) 31 31 31 31 31
% APR 1286.10% 1286.10% 1286.10% 1286.10% 1286.10%
Loan Amount £300 £300 £300 £300 £300
Total Repayable £375 £375 £375 £375 £375
Term(Days) 31 31 31 31 31
% APR 1286.10% 1286.10% 1286.10% 1286.10% 1286.10%

The interest rates vary with each loan provider. Typically the APR varies between £20 to £30 pounds per £100 borrowing. One advantage of a Payday Loan is that you are escaping the lengthy sanctioning procedures and there are no processing fees or administrative costs.

Understanding Payday Loans

In today’s world of ever increasing expenses, it often happens that one falls short of cash even before the next pay day is due. This often happens due to unforeseen expenses like an unforeseen medical expense or college bills or some other such emergencies. In this condition one is often baffled as to how cash might be arranged.

Under these circumstances, the best option for you might be what is known as the ‘Payday loan, often also termed as ‘cash advance’ or ‘Short Term Loan’. As these phrases will tell you, the loan is taken in case of sudden cash emergency before the pay day arrives. Our discussion here seeks to highlight, the different nuances of the Payday Loan & how one might benefit from it.

Payday loan explained and its effectiveness

A pay day loan is basically a loan taken to cover your expenses before your next pay day arrives. Normally, one can loan up to an amount of £80 to £800, but this may again vary from person to person, depending on the time and the persons credit record too. The date for repayment of a payday loan is that which has been agreed upon by both lender as well as taker. Usually this is the date when the next pay day cheque is expected, within a span of 30 days.

A Payday Loan might be used for various purposes that can include medical bills to a sudden holiday! As long as the loan is paid within the time period specified by lender and agreed upon by borrower, there is no problem.

Usually because of the urgent nature of the loan the payday loan carries a higher rate of interest than other loans. If the lender is satisfied that you are capable of repaying his/her money within the stipulated time, obtaining such a loan should not be a problem.

There are some payday loan providers who allow you an extension on your advance if you pay the interest within the first loan period. Payday Loans Charges

Before you involve yourself in any kind of loan or financial transaction it is mandatory to know what are the charges you need to pay and more importantly if the aforesaid loan is actually what you need or not.

The best part about Payday Loans is that there are rarely nay hidden costs that you need to be worrying about. So whether it is the worry of administration fees or other hidden costs, rest assured a pay day loan does not involve all this.

However, you need to understand properly and remember the principal sum you have borrowed. You principal sum of course depends on how much you need and how much the provider gives you. You also need to understand the rate of interest you are being charged. The interest rate varies from 20 to 30 Pounds. These days of course there are online tool where you can calculate the interest rate you are being charged and be aware of your loan details. Sites like provide this facility. Some payday loan companies might levy additional charges on you if you want to extend the repayment date by paying off the interest amount due.

Is a payday loan the right option for you?

Here we take a look at why a pay day loan may be just the thing you need. If you have a steady source of income a bank account, a debit card, and are above the age of 18 you could be eligible for a payday loan and you might benefit from such a loan too.
  • A pay day loan is good for some one who needs immediate cash; in fact you don’t even need to be present yourself. The amount will be deposited to your account once an online credit check is done for you.
  • Even people with bad credit history can avail a payday loan as long as you have the money to repay loan, your credit record is of not much importance here.
  • Take a Payday Loan and pay a fixed interest instead of paying penalty for defaulting charges in banks.
  • A payday loan does not take into account the fact whether you are a tenant or a homeowner, rules are same for all.
  • In order to pay off immediate debt gathering cash through a pay day loan is the ideal way out.
  • Pay day loans are good for those who are in urgent need of cash but have no other source of getting cash.
Pros and cons of the Payday Loans

Just like everything else there are two coins to obtaining a Payday Loan. While a pay day Loan might be a much needed relief for those in need of immediate cash, one must also understand the fact that here the interest rates are very high. These types of loans are good for those who have an otherwise steady source of income but have a temporary requirement for cash. In such cases, a payday loan guarantees you quick cash without much questioning. In fact within a few hours of your loan application you can get the cash. On the other hand one must be very punctual about repayment of the money on time, failing which a very high interest rate will be applicable on the defaulter.

Eligibility for a pay day loan

You need the following to be able to apply for a payday loan
  • Bank statements - usually covering a two-month period.
  • address proof
  • Proof of pay slip.
  • Signature proof can be verified by driving license or passport.
  • A copy of your debit card.
These days there are plenty of options for applying for Payday Loans. There are plenty of online companies which are ready to give you a loan having done a quick verification. As such you can compare the interest rates of different companies online, and apply for one where the interest rate suits you.

Typically the salaried class is eligible for a Payday Loan provided their salaries are directly credited to their bank. They should also be using cheque books and debit cards. Instant approvals are available for you if you use a cheque guarantee card as it assures your timely and guaranteed payment. This reduces their risk.

Advantage of Payday Loans