Payday Loans Explained

The global economic crisis in 2008 had a huge impact on the way in which banks lend money. The traditional channels for borrowing money suddenly became much more difficult. This opened the market up to independent loan companies, making it easier than ever to get your hands on the money you need. As these loan companies are not regulated, the representative APR can be very high, so always make sure you are aware of exactly what you are signing up to.

Payday loans fall under the bracket of this new type of borrowing. They are especially designed for those in need of some extra cash before their next paycheque. This means that you can borrow anything up to £1000 usually for a period of 2 weeks to a month. This type of loan can be extremely useful if you are a bit short on a given month. Whether it’s an unexpected expense like a car repair or dental bill, or it’s your anniversary and you need a little extra to tide you over, then a payday loan can come in very handy.

The criteria for being accepted is pretty basic; you need to be 18, be a UK citizen, have proof of employment and have a bank account. The online application forms are simple and fast to fill in. The money can even be in your account as early as an hour after you apply. Credit checks are very rare, so you can get a loan even if you have a less than perfect credit history.

As these loans are relatively small sums, the interest rates are relatively high. This does not have to be an issue however if you are sensible with your next paycheque and budget to pay the loan back. You should never borrow more money than you can afford to pay back, and as these loans are designed to be paid back after a couple of weeks, pay them back as soon as you can to avoid charges and high interest. If you are smart with your borrowing, payday loans are a great way to enable you to pay for unforeseen expenses or the odd treat.

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