A Payday loan is short term lending with high interest rate (up to 5,000% APR). This type of lending has become popular for people who can't make it to the end of the month with their wages and as such need additional finances.
An example of a Payday loan is, John goes to his local Payday loan company and asks to borrow £200 for 1 week. John will then at the end of the week repay £250 back to his Payday loan company.
What are the benefits of a Payday Loan
- It can provide a short term release during a tough financial period
- All you need is a UK bank account and a regular income to get a Payday loan
- Usually there are no credit checks
- The money is available quickly and can often be in your account within 24 hours.
- If you miss your payment the interest and charges can be huge
- The Payday loan company will pressure you to get their money back.
- If you are self employed the checks will be larger and more in-depth than for anybody else
- Like all loans and debt, if you fail to repay the money a Payday loan company can get a charge for payment order and then take money directly from your wages
If you have a debt problem contact a debt advice charity for help. If you have a financial problem at the end of the month then we advise you to look at a budget plan which can help you manage your finances better and avoid the need to use a Payday Loan company.
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