Payday Loans – Do You Need Instant Cash?

Payday loans are an increasingly popular way of borrowing small amounts of cash, usually between £100-£1000. Payday loans are essentially unsecured short term loans designed to tie you over until your next payday, hence the name. The way they work is that you borrow an amount which you repay, plus interest, when your next pay cheque comes through.

Payday loans can be an important lifeline for those caught in a tight spot. You should only take out a payday loan for a short term emergency situation. For example, you might have received a bill that you can’t afford to pay, you have to pay for urgent home or car repairs, or you just need some extra cash to deal with your daily living expenses. If you need to pay for something and you cannot wait until your pay cheque comes through then payday loans can be very handy. In some instances, they can even work out cheaper than overdraft charges or going over your credit limit but this is not always the case.

Payday Loans are so popular because they are easy to get hold of and you can have the money often the sameday you apply and some lenders claim to be able to get the money to you in under an hour. The application process can be completed online in a matter of minutes. Payday loans are very accessible because if you have bad credit, have been refused a loan elsewhere or even been bankrupt you can still take out a payday loan because there are minimal credit checks involved. Usually you will find that the minimum requirements are that you are over 18, are a UK citizen and have a bank account.

As Payday loans are so easy to get hold of the interest is considerably higher compared to other loans. This makes them more risky, especially for those who are already in debt and the payday loan industry has been heavily criticised as lenders have been blamed for escalating people’s debt problems. When you take out a payday loan if you fail to repay what you owe plus the interest, the debt can be rolled over to the next month but you could end up paying interest for both months. Each month that you miss repayments you could keep paying the interest making the loan very expensive very fast. This could in turn spiral into a serious debt problem. Payday loans should never be taken out to solve any long term financial problems you may be experiencing. Also note that if you fail to pay back the loan you could damage your credit score which can affect you in the future when applying for financial products.

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