Most people have heard of payday loans, but that doesn’t mean they know what they are exactly, how they work, and who they are intended for. The payday loan industry is shrouded in bad rep and sleazy practices. Despite this, many people in dire straits still go for payday loans.
If you’ve run into a situation where you need access to cash, you may be considering a payday loan. Before you go ahead and get one, here’s a quick look at what they are and if it’s the right solution for you.
What is a Payday Loan?
A payday loan is essentially short-term credit. It provides a person with access to quick cash meant to cover an unexpected emergency. Payday loans are usually small amounts and need to be paid back within 30 days. A payday loan tends to be £1,000 and under. The repayment schedule is just one payment, rather than monthly installments.
The interest rate on these loans is quite high, which is a big part of why you want to pay it back quickly. Think of it as a short-term solution rather than a long-term one. In the UK, anyone who is 18 years and older can apply for a payday loan, but they need to be a resident in full-time employment. Each payday loan institution will have its own lending criteria that you must meet to be approved.
Easy Online Access
Thanks to the push to make things easy and convenient for people nowadays, it is possible to access payday loans online. You can go ahead and apply for one, get approval, and even have the funds transferred to you electronically – all without having to leave your house. This can be especially handy if you are on the road and can’t get into an actual payday loan storefront. Typically, the application takes mere minutes to fill out, as it’s not overly involved.
Why Use a Payday Loan?
Payday loans can be helpful in a number of different situations. A payday loan can be very helpful in an emergency where you need access to cash fast and don’t have time to go through your bank. Maybe your credit card has reached its maximum limit and you suddenly need to fix your car. It can also be a way of getting around overdraft fees that you would otherwise have to pay on your bank account. For those with poor credit, a payday loan may be the only loan they qualify for.
It’s important that you make sure the payday loan is a short-term solution rather than a long-term one. Unfortunately for many people, they fall into the payday loan cycle where one loan leads to the next. Because the interest is so high on these loans they should be seen as a last resort only, and you need to know you can pay it off in full on time.
Payday loans can be a perfect solution under the right circumstances. They can provide you with the cash you need and relieve the stress of short-term financial problems.