The emerging use of payday loans

There are many different types of loans available these days, with something to suit most needs and circumstances, from secured loans for homeowners to mortgage loans for those wishing to buy their own home, unsecured loans for tenants or those living with family, and payday loans for those looking for a shorter term borrowing solution.

Payday loans have become increasingly popular over recent years amongst those that are looking for shorter term finance but do not have access to a credit card or other funds.

You will find a number of lenders that offer payday loans these days, and you can get these loans direct from high street payday loan specialists as well as from specified online lenders.

These loans are quick and easy to process, so you won’t be left hanging around, and although the interest rate is high the fee is charged at a flat rate depending on the amount borrowed, and is manageable for most borrowers. Below are some frequently asked questions relating to payday loans:

What are payday loans?

A payday loan is a short term loan, and as the name suggests is designed to tide you over until payday comes around. These loans are both short term and have modest maximum borrowing limits.

Why would I need a payday loan?

Many people find themselves running short of cash during the course of the month, and if payday is still a fair way off it can be difficult to work out how you will manage. Things can be even worse if an unexpected bill or emergency arises, and you need cash to make payment.

Many people don’t want to have to go to friends or family in order to borrow money, and if you have no access to savings or a credit card then you could find yourself in a difficult situation. However, the availability of payday loans means that you can still get the money you need for a short period until you get paid, so you won’t need to panic.

How much can I borrow with a payday loan?

The amounts that you can borrow on a payday loan are quite modest, and the most that you will usually be able to borrow on this type of loan is up to £1000. However, the exact amount that you will be able to borrow will depend on a number of factors, such as your income and employment status. The lending levels on payday loans can vary from one lender to another.

I have bad credit – will I still be able to get a payday loan?

One of the good things about payday loans is that there are no credit checks involved, and this means that even those with bad credit can qualify for a payday loan providing they meet the lenders own eligibility criteria.

What is the criteria for taking out a payday loan?

This can vary from one lender to another, but in general you will need to be employed and prove that you have a bank account for repayment of the loan.

You will need to provide proof of your identity and address, proof of your bank account, and wage slips to prove your employment and income. You should check with individual lenders with regards to their eligibility requirements and the documentation that you will need.

How long will it take to get the money from a payday loan?

You can get the money from your payday loan very quickly in most cases. If you go to a high street lender for the loan you will usually receive the money right away once you have presented your documentation and the loan has been authorised. In some cases, with online lenders for instance, you may receive your money into your account either later in the day or next day.

When do I have to repay the loan?

A payday loan is a short term loan and needs to be repaid within a set period, which is generally 28 days from when the loan is given to you. You will usually have to set up a one off direct debit for the money to be repaid on the specified date, or with some lenders you will need to write post dated cheques, which the lender will then bank on the date that the loan has be repaid.

source:http://www.thriftyscot.co.uk/Loans/122007/the-emerging-use-of-payday-loans.html