If you have had some bad debt problems in the past, which you are now successfully dealing with, you may be working within a fairly tight budget.
If you do not have much scope to cater for the unexpected, payday loans may help you to make it through to payday if you should encounter a financial emergency.
Keeping to a strict budget is not easy at the best of times and even the best financial plans can be derailed by a larger than expected bill or your car or washing machine breaking down. This may be particularly true in the days running up to payday.
The trouble is that if you have had debt problems in the past, you may find that traditional lenders will be wary of advancing even small sums of money.
So you may have problems getting them to agree to a small loan or even a short-term overdraft.
Payday loans may offer a lifeline in these circumstances.
This video explains it further:
This type of lending typically involves relatively small amounts of cash with sums of between £100 and £250 being fairly typical. The money is lent for short periods of a number of days or weeks.
In overall lending terms, these small amounts and short time periods may present less risk to providers, so they may be prepared to lend to you even if you have had debt problems in the past.
To apply for payday loans:
- you need to be employed with a regular income;
- you have to be over 18 and a UK resident – though you typically do not have to be a homeowner to benefit from this type of lending;
- some payday loan providers operate online, so having a bank account into which they can transfer the loan is necessary, as is a direct deposit on that account to allow the repayment to happen;
Once you apply, a credit check may be carried out. Not all applications may be accepted, as some debt situations may be just too risky.
If your application is accepted though, you may find that your loan can be transferred to your account in as little as a couple of hours, provided your bank can accept these types of funds transfers.
You can then deal with your cash flow situation.
When your payday arrives, a debit transaction on your account repays the loan together with the agreed interest and charges.
When used responsibly, payday loans can provide just enough money to help you deal with your financial emergencies, without offering opportunities for slipping into long-term debt.