Payday loans or pay check advances are small, short term loans which are designed to provide the borrower with a small amount of extra money until payday. Sometimes referred to as cash advances, payday loans are a form of unsecured loan which can be obtained via the internet or in person at payday lending stores. Payday loans can vary in value and length but most payday lenders will only offer a minimum payday loan of £80 and a maximum payday loan of £1000.
Payday loans are fairly quick and easy to obtain and because of the short length of the loan are a popular option with consumers who know they can repay the amount in full on their next payday. Unlike other loan options, payday loan lenders require very little information from borrowers and rarely require credit checks – in fact, most lenders will will even supply the money as soon as the borrower applies for the loan.
Payday loans are used by a wide array of consumers who need a bit of extra money to pay an unexpected bill or settle their mortgage repayments. While most payday issuers don’t do credit checks on consumers, most lenders will require a form of security in the form of a postdated cheque. In most cases before the borrower receives the money they are required to sign a postdated cheque to the lender for the full loan amount plus interest – if the borrower fails to repay the loan the issuer is then allowed to cash the cheque and receive the money they are owed.
While payday loans are regarded as a great option for those who need instant cash, it’s always worth reading the small print – some lenders charge huge amounts of daily interest of the loan itself so even if you only borrow ¬£80 for 10 days you could end up paying around ¬£100 back. The highest known interest rate in the UK for payday loans currently stands at around 2225% so this is something you need to be aware of before you take out a payday loan.
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