I’ve Heard Of Payday Loans, What Are They?

I’ve Heard Of Payday Loans, What Are They? image 0 All

by Peter P Piper

Well, just that in fact, a payday loan is a short term loan repayable in full on your next payday.

They are not intended for long term finance and are usually applied for by people who for whatever reason cannot get loans from other sources such as high street banks and loan companies.

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These can often be self-employed, persons with bad credit history or little track record of credit.

The world- wide recession has made credit much more difficult to obtain and moved a whole section of the community into what is known as ‘the sub-prime market’.

People who only a year or so ago would probably have had no problems in applying for a bank loan are now finding themselves turned down and only people with triple A credit files are being accepted for cheap finance.

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So what can you do if the car engine blows a gasket or the central heating boiler blows up in the middle of January and your bank won’t extend your overdraft?

Well a Payday loan may be the only solution available to you.

The payday loan companies are much less stringent in terms of their selection criteria and in return they charge a much higher rate of interest.

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Generally as long as you have a card payment facility on your bank account the payday loan companies will give you an loan in cash of up to 750 repayable in full on your next payday.

Sometimes these payday loans can be extended by payment one month’s interest.

Are these types of loan very expensive? Yes they are, if you compare to a bank or credit card loan rate but they are not intended to be used for long term finance and have to be viewed differently. Often having a lack of funds may cause your regular monthly payments to fail so charges are applied by your bank and also from the payee and these together can add up to much more than the payday loan interest.

If you are thinking of applying for a loan till payday then you need to be sure that you will be able to repay not just the loan but the interest as well out of your next salary cheque.

Consider if there is any other possible way of solving your problems open to you, a loan from a friend or relative?

If you decide to go ahead with your payday loan application most of the payday loan companies will have the loan credited to your bank account on the very same day.

About the Author:
About the author: Peter P Piper is a writer on financial matters. Learn more about payday loans at
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