Payday Loans: Making it simple

Payday loans are becoming more and more popular. You have probably seen adverts for them on the television or on the internet. But they also get a lot of bad press too.

So what exactly is a payday loan, how does a payday loan work and how much will it cost you?

What is a payday loan?

A payday loan is a quick and easy way of borrowing relatively small amounts of money over a short period of time, often between £80 and £1000.

Applying for a payday loan is simple. You can do it online and it will only take you a few minutes.

Once you have applied you will usually get an answer almost straight away and, if your application is successful, the money will be transferred directly in to your bank account within 24 hours – possibly even within an hour.

What can I use my payday loan for?

Once the money is in your bank account it is yours to spend as you wish.

Some people use theirs to pay off bills or credit cards, for example, in order to avoid expensive bank charges.

Others might use the money to do some important home improvements, repair their car, or go on holiday, while some people might just use the loan to put food on the table until payday.

How much will a payday loan cost me?

At the end of the month you will need to pay back your payday loan, plus around 25% of the loan amount.

In simple terms, this means that if you borrow £100, you will have to pay back £125 on your next payday.

The money will usually be taken out of your account by direct debit on the day that you have agreed to pay it back, so it is very important that you make sure that you have enough funds in your account to pay back the loan.

How do I qualify for a loan?

If you are a UK citizen, have your own bank account, a job that pays you a regular wage and you are 18 years old or over, you will be considered for a payday loan.

Even if you have a poor credit history you will still be considered for a payday loan, because each case is judged on its own merits.

A quick loan should never be seen as a long term solution to serious debt. It is very important that you borrow responsibly and live within your means.

If you find that you regularly run out of money every month and require a payday loan more times than you can comfortably afford, you should seek independent financial advice from a debt charity.

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