Payday loans are short term loans which are required to be paid back by the next payday. Thus the tenure of these loans is very short, lasting for just 2-3 weeks. The amount of loan is small and can range from £500 to £1500. The interest rate for this sort of loan is on the higher side but since the tenure is very small the actual interest figure does not amount to much.
Payday cash loans, because they are so fast and hassle free, are very handy when there is some sudden expense and there is not enough money to cover temporary but urgent payments. In fact they are the only help available to the people who have a bad credit history and have maxed out on their credit cards.
Benefits of payday loans
Though many people criticize payday cash loans because of their high interest rates but if one were to actually analyse the many benefits it offers to the borrowers, one finds that it is a good alternative financing option especially for those who despite having a steady job can't get any loans from banks.
Some of these benefits are:
o Fast and hassle free processing - approval within minutes and money in the account in 24-48 hours.
o Easy to apply - no need to run to the bankers, just fill up an online form from the comforts of home or office and you are on.
o Nil paperwork - no need to furnish any documents proving your identity etc.
o No credit check done - all you need is to possess a steady job and a valid checking account and since no check is done on past credit history, people with bad credit history can get the loan.
o Easy repay - you just need to furnish a post dated cheque or arrange for auto-debit from the bank account to repay the whole amount with interest thus there is no need to keep the bank account ready each month for the next installment.
o Easy terms - no need to furnish any sort of security and if you feel unable to repay on time just ask for an extension which is easily provided against a fee.
Comparison with personal loan
Though there are two major differences between personal loans and payday loans - the size of the loan and the tenure of the loan, if the required amount is small and need is just short term payday loans score over personal loans on the following points.
Urgency - Getting approval for personal loans is a long drawn out process with its taking anything between 5 to 15 days. So it is not a viable option when the need is sudden and now. On the other hand payday loans take just minutes to get approved. And you can actually have the money in your account within 24-48 hrs of applying.
Procedural ease - Banks require a lot of documents such as income proof, identity proof, residence proof etc. from the borrower to process the loan. Apart from that there is a stringent credit check involved. On the other hand, there are no documents required for payday loans. You just need to have a steady job and a checking account.
Qualification for the loan - Since stringent credit history checks are involved, personal loans are out of reach to people with adverse credit ratings. No such case with payday loans. Anybody and everybody with good job and bank account can successfully apply for the loan.
The above discussed benefits of payday loans make them a popular finance option in the UK. They prove to be very useful in case of sudden emergency but one should be careful in managing them because of high interest rates and should repay them on time.