Editor’s note: This is a guest post by Jessica Moser
A payday loan, sometimes referred to as a cash advance or payday advance, is a short-term small principal loan borrowed against the recipient’s next pay cheque. Typically these loans range between £50 and £1500 and can be applied for online, usually without anything to fax or extra paperwork to fill out. Payday loans can be deposited directly into the borrower’s bank account, sometimes as soon as the same day as the application. On the borrower’s next payday , the loan principal and finance charge is withdrawn from their bank account and the transaction is complete. Some payday loan companies offer extensions on their loans, allowing customers more time to pay back the loan for an additional finance charge.
Payday loans are used for emergency expenses and immediate money needs like car repairs, overdue bills and groceries. They can be a quick and convenient way to bridge the gap between paydays and are typically less expensive than unauthorized bank overdraft fees.
Payday loans borrowers typically do not need perfect credit in order to apply. They need to be at least 18 years old, have an active bank account, be currently employed and receive a regular pay cheque. Borrowers of payday loans can even improve their credit score by repaying their payday loans on time.