Payday Loans: A Simple Way To Meet Lifes Unexpected Expenses

A payday loan is a short term loan which allows you to borrow a small amount of cash which you return on your next pay day

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The concept began in the US but is becoming increasingly popular throughout the world and especially in the UK as a simple solution to a short term financial problem such as an unexpected bill or an important and expensive event. For example, you may rely on a car to travel to work and find out that it needs emergency repairs or risk breaking down.

In cases like these, its not always possible to wait until pay day to meet necessary expenses in time and you may need a little extra cash to tide you over in the meantime. Where banks are generally unable (or unwilling) to lend the odd fifty quid here and there, payday loans can provide an easy bail-out.

So how does it work? The basic idea is quite simple the applicant sets the amount they would like to borrow, then sets the repayment date (generally, the date their pay cheque is due). The loans provider will then either approve or refuse the request.

What sets payday loans apart from traditional credit and longer term loans is their speed. Loans providers are often able to provide an instant decision about whether or not to lend based on predetermined criteria, and payments can be made within 24 hours, depending on the borrowers bank.

The amount you can borrow usually depends on how much you earn, although broadly speaking most loans range from 100 to 1,000. Applicants with very low earnings may be refused a loan entirely or able only to take on a small amount of debt at any one time.

Measures such as this are designed to safeguard the interests of both lender and the borrower ensuring that loans will repaid on time and avoiding borrowers getting into more debt than they can manage.

The fees on payday loans in the UK are flat fees rather than interest rates, and vary according to the amount of money that is borrowed. Generally speaking, the bigger the loan, the higher the fee.

Besides setting a limit on the amount of the loan, there are also some basic requirements for the loan applicant, to determine that they will be able to pay back what they have borrowed. Applicants for a payday loan in the UK must be at least 18, be a current resident of the UK, have a bank account and be able to demonstrate a steady, verifiable source of income.

by: Phoenix Payroll Ltd

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