Payday loans, the short term cash alternative?

Most people at some point have struggled to make ends meet in between paydays. Unexpected costs such as a car repair or boiler breakdown can leave people really struggling. One option is to take out a personal loan. This is a great choice for people who want to borrow over a thousand pounds and pay it back over a longer period. However, that is not always the case as some people just want to borrow a few hundred pounds to tide them over until pay day.  This is when payday loans can be an ideal choice.

Payday loans, on average, are for around £300 and the borrower repays them when they get paid. This can help out with additional expenses during the month and can also help people who do not have the best credit history.

You can apply online for payday loans, this means that the money will be deposited in your bank account very quickly. This might also reduce the checks that need to be carried out to verify income or your credit history.  All that happens is the money lender takes the money out of your bank account when you get paid.

Another way of getting a payday loan is to go to a store that offers this service. The borrower just takes their proof of employment and income such as payslips and bank statements. They then write a post dated cheque for the amount they wish to borrow plus the fees that the loan will incur over the borrowing period. On payday the borrower can either go into the store and repay the loan in cash or the money lender will deposit the cheque.

This type of loan is ideal for people on low incomes who do not always have the best credit history and so may not qualify for a bank overdraft.  Although the interest is higher than a personal loan or overdraft it is a short term solution to financial difficulty. Money lenders argue that because the loan is only short term then the interest charged, although higher, is not too much because of the short time it is borrowed for.

When compared to a personal loan it means that the borrower can borrow less money over less time. The checks involved with payday loans are less than with a personal loan meaning the borrower can get the money they need far quicker than if they applied for a personal loan.

A personal loan may be a better option for someone who is looking to borrow more money over a longer time scale but a payday loan can be ideal for many in the short term.

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