For those unfamiliar with the term "payday loan" it refers to a short term loan, designed to get you through the month until the next payday arrives. Such loans have become increasingly popular in recent times because of the downturn in the world's economy and the consequent large numbers of people struggling to make ends meet. With fuel and food prices seemingly to constantly rise many payday lenders are seeing a dramatic increase in demand for their services.
Interest rates tend to be high of course, because these are unsecured loans, but the advantages to many people outweigh this consideration because a payday loan can help them survive until their next wage packet comes in without having to compromise other lines of credit that might already be in existence. It does not, for example, make sense to default on your mortgage payment or present someone with a dud cheque to buy time because this could lead you into serious problems with your credit standing in the future. Virtually all lenders of money will check an applicant's credit score, and if you have a poor one because of payment defaults you may never get credit again, or only at the worst possible rates imaginable.
Payday loans are usually for a period of 1-4 weeks, and the big advantage is that the money is usually released, straight into your bank account on the day you apply. Getting approved can be very straightforward online, taking only a few minutes.
You need to have a valid bank account and be over 18 years of age, and many payday lenders insist you are in full time employment. Terms and conditions vary between companies and being able to compare online is very useful. The less restrictive the terms and conditions, the higher the charges are likely to be. The better your credit rating when you apply, the more chance you have of securing a good deal.
An average loan of between £80-750 can cost £25 per £100 borrowed over a period of 4 weeks. Payday loans are not to be thought of as anything other than emergency money, but certainly if you have a real need for a few quid today then they can be the only viable solution.