Payday loans: bridging the gap between pay cheques?

In today's fast-paced, hectic and consumer-driven world, it is sometimes the case that there is simply too much of the month left at the end of your pay cheque. While everyone could do with a little extra money from time to time to help pay for an unexpected bill or simply to indulge after a stress-filled week at the office, many people find that taking a fully-fledged loan is nothing short of overkill. With this in mind, more and more people are turning to payday loans to help tide them over between paydays.

A payday loan is a short-term loan designed to bridge the gap between one pay cheque and the next. The process of applying for a payday loan is quick and the criteria for acceptance isn't as strict as the application process of a conventional loan. To apply for a payday loan, the applicant needs to be over eighteen years old and a UK resident. They must also have been employed for at least three months in one job and have their salary paid into a bank account.

Unlike conventional loans, there are no credit or background checks but lenders will require seeing proof that salaries have been paid into a bank account - so have statements at the ready! You don't have to provide specifics of what you need the money for and, once the lender is satisfied, the requested amount is usually paid directly into your bank account within 24 hours. The amount you can borrow typically ranges from £50 to £800 depending on your earnings and repayments commence from your next payday.

Repaying a payday loan can be done in several ways. You could for example, give the lender a post-dated cheque for the full amount of the payday advance, or you could arrange for the loan to be repaid directly from your bank account. You can also extend the loan period by paying off chunks of the advance, but be careful as this will add additional fees onto the balance and you could end up paying much more than the original payday loan in fees alone!

While payday loans are useful for helping with unforeseen financial difficulties, such as car repairs or an unexpected utility bill, they are not a good long term plan for managing your finances. Interest rates charged on payday loans are extremely high, and could drive up the cost of the loan way beyond what you intended to repay.

As a result, it might be worthwhile checking the personal loan market in the event you need to borrow some money. Many financial institutions now offer personal, unsecured loans and, like all other loans, you can spread the cost over a period of time to suit you. Furthermore, your loan won't be subject to crippling interest rates and you could still have the money in your bank account in a matter of days.

Article Source: http://www.debtfinancearticles.com.

About the Author:
Paul McIndoe is a recent university graduate whose hobbies include water-skiing and rock climbing.