When people need to borrow a small amount of money like say £500 or less, they will often take out a payday loan. In a nutshell, payday loans are basically short-term loans of usually 30 days or less, where the borrower agrees to pay the amount borrowed plus interest by a certain date.
There has been a lot of bad press recently about payday loans, which is usually down to the amount of interest charged. For example, one provider charges £97 interest on a £300 payday loan that is to be repaid in 30 days.
But are payday loans really all that bad? To be honest, they aren’t! Here are some of the reasons why:
It’s great for people with a poor credit history
One of the major selling points about payday loans is that they are aimed at people with a less-than perfect credit history. This means if you were turned down by your own bank and no other banks or financial institutions wanted to help you out, you can always turn to a payday loan company to help you in your hour of need.
Payday loans are unsecured, so they are suitable for tenants as well as householders, and once you are approved for a loan, the money can normally be transferred into your bank account the same day (or the next business day).
Payday loans are easy to arrange
There is no waiting around for approvals or paperwork to sign, as many payday loan firms let you arrange your loans online.
All they need to do is ask you for your personal details, how much you earn and as long as they can confirm your identity and ensure that you are likely to pay them the money back, you will have no problem in borrowing the cash you need.
They can be a godsend for emergencies
If you have an emergency that requires a sum of money to be paid for upfront, but you don’t have the cash spare until you get paid, a payday loan can be extremely helpful in such scenarios.
Some people even borrow the money the need for just a few days rather than weeks, so you don’t have to wait for a potentially long period of time before you can access the funds you need.
Requirements are simple
Some mainstream High Street lenders normally require you to fulfil all sorts of different criteria. For example, my bank says that in order to apply for a loan, I have to be banking with them for at least 6 months before they will even consider me for a loan.
Payday loan companies, on the other hand, are happy to lend money to pretty much anyone off the street, and this is one of the reasons why many people prefer to borrow the money from such organisations rather than their own banks.
Some payday loan firms offer guaranteed cash; check out this guide about guaranteed payday loans for more details on how it all works.