Are you finding yourself short of cash every month? Originally if this were the case you would talk to your bank, but this is no longer the case. The credit crunch has restricted ordinary people's access to traditional lenders. Many people are finding they no longer have access to loans, credit cards or overdrafts. Rising living costs, the reluctance of banks to lend money and the continued demand for credit, has given rise to a new breed of lender: pay day loans companies.
So what are pay day loans? Quite simply, it's a small short-term payday cash advance on your wages or salary designed to cover your expenses till payday. These loans also go by the names: payday money, payday advances, money till payday, payday express and payday bridges. Whichever name you know them by, they usually involve borrowing £50 - £750 - and getting the cash in your pocket within hours. A lender will advance money against your bank details and automatically recover it when your next 'payday' arrives.
Pay day loans great strength is that they give those people the banks have turned their backs on, the chance to get credit once more. They're also one of the quickest ways to borrow money. That's why UK payday loan applications have risen 55% this year alone. Also not surprising, therefore, is the reason why 10 million borrowers in the US have benefited from an easy pay day loans for over ten years.
UK pay day loans companies freely admit there are less expensive ways to borrow money. Most of the pay day loans have an annual percentage rate (APR) of about 1500. There is good reason behind this. The loans are only in the short-term so the high APR does not give a true reflection on how much you would payback. Put simply, if you borrow £100 you will pay back £125. Compared with credit cards when you work things out this way you realise that a short-term loan works out cheaper than a exceeding your overdraft limit.
Payday loans require no credit check. Of course, this has its benefits and its pitfalls. That's why lenders make the true cost of borrowing clear at application stage. This is why the British Cheque Cashers' Association receives few complaints about cash advance loans from the general public.
If you take out a pay day loan on a regular basis, the less expensive it will become. Many lenders offer a 15% discount to their repeat customers. Plus, you will find that companies drop the admin fees when you go back for another loan. The best place to find how free payday loans deals compare with those offered by high street banks is online.
Bank loans have been around for a long time. Typically, this has involved borrowing large sums from "reputable" lending institutes with low APRs. This is no longer the case! Unfortunately, our old friend the bank loan's reputation is somewhat in tatters these days. If the commentators are to be believed, it's the banks' irresponsible lending that's sent our economy spiralling into recession.
If you need a large loan at a low APR then a bank loan is what you need... assuming you can get one. However, the banks have been well and truly knocked off their position as the most reputable lenders in the UK.
The reality of comparing payday loans to high street loans is that you cannot really compare them. Why? Because they are two totally different types of loans and the banks aren't lending anyway.
In sum, if you are employed or have a regular income you can . They're simple products designed to help people with a short-term cash-flow problem.
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