Loans come in various different shapes and sizes.
The most traditional type of loan is a loan from your bank or building society, but more recently a large number of lenders have popped up who offer short term cash loans quickly and easily.
These are often referred to as payday loans, and they are very different to bank loans. So, what are the differences?
Payday loans are quick and easy
While applying for a bank loan will usually be a long, laborious and frustrating process, getting credit from a payday lender is much quicker and easier.
You can apply online in minutes and you will be given a decision almost straight away. If the decision is positive and you are accepted, the money will usually be transferred directly into your bank account within 24 hours, or even within an hour depending on which lender you use.
You will not be asked to fax or post documents, and you will not be asked to give pages and pages of seemingly irrelevant information.
Payday loans are accessible
Bank loans are generally for large amounts of money and, for this reason, the banks are very careful about who they lend money to.
If you have missed loan repayments in the past or have a poor credit history you are unlikely to be accepted for a bank loan.
With a payday loan you could be considered for credit regardless of your credit rating. Approval is never guaranteed, but we can guarantee that every application will be treated on its own merits, and approval levels are comparatively high.
This means that even if you have been turned down for credit in the past you could still qualify for a payday loan.
In order to qualify you need to be at least 18 years of age, be living in the UK, be receiving a regular wage from your job and have your own bank account.
Payday loans are unsecured
Most banks or building societies will hold some security over your loan. This means that if you default on payments, your house or your car, for example, could be repossessed.
Payday loans are unsecured loans, meaning that you do not have to provide any security on the loan. This means that if you don't own your own home or drive a car you could still qualify for a payday loan.
Responsible lending
It is very important to you and to us that you only ask to borrow what you know you can afford.
If you repay your loan on time as agreed there will never be any hidden charges or additional fees. If, however, you fail to pay back the loan on time you might be liable for extra charges, so we always recommend that you repay on time.
Before you apply make sure that you can definitely afford what you are asking for. You will have to pay back the full loan amount plus around 25%, so make sure you understand exactly how much this and when it will be due.
Payday loans are not long-term loans and are not a solution to long-term debt. If you have a problem with debt you should seek advice from a charity or government organization.
