What are Payday Loans?

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You may have heard the name ‘payday loans’ but may not really be sure of what they are. You may not even think it matters, but actually it is a really good idea to know a bit about every type of loan. This is because, when you do need money, it is important that you borrow in the best way for you. We will have different borrowing needs to each other and at different times, which means that there will not be one loan that fits all. Therefore, we need to know about all loans and then when we do need to borrow money, we can think about what we want from a loan and with our knowledge of loans, will be able to identify the loan that will be the best one for us. So, it is a good idea to know about the main features of each loan and when it might be a good idea to take when out.

Main Features of a Payday Loan

A payday loan has a few main differences which sets it apart from other types of loans. For example, you can normally only borrow relatively small amounts of money between £100 and £1,000. Most people are able to borrow even if they have a poor credit record. The loans can be arranged quickly, with some lenders being able to provide payments within a few hours. Some lenders will even be available on weekends and overnight in case money is needed outside of normally banking house. The loans have to be repaid quickly – normally the full repayment including interest and fees has to be repaid on the next day that you get paid.

When to Use One

So payday loans were designed to help out those people that could not borrow money elsewhere because their credit record was not very good. This means that they can be handy for anyone that does have a poor credit record. However, they are also designed to help put in emergencies and the money can usually be handed over really quickly. This means that even if you do not have a poor credit report, it might be handy to know that these loans can be arranged quickly in emergencies so could be useful then as well. They are for small amounts though and first time lenders may only be able to borrow a few hundred pounds. This is because a lender might want to make sure that the borrower is capable of repaying a small amount before they are willing to trust them with more. If this is the case, then it means that you will not be able to use the loan if you need a significant amount of money. The loans also need to be repaid as a lump sum and so it is really important to make sure that you will be able to afford to do this. Although the money will go out on your pay day, which might make you think that it will be easy to afford it, it is a good idea to check your bank balance to make sure that this will be possible. Make sure that you will be paid enough and that you will have enough money to cover the loan repayments as well as everything else that you will need to pay for as well. It may take a bit of working out, but it is worth it because if you do not manage the repayment there will be extra charges to pay and no one likes to have to pay anything more than absolutely necessary for things.