There are still some people that do not really know what payday loans are. Some people have no clue at all and other people think they know but perhaps do not. It is therefore a good idea to make sure that you really do know what they are and then you will be able to check and see whether you really do have a full understanding of them and how they work. This is important because if you are in the situation where you need to borrow some money, then you need to have an idea of how the different types of loans work so that you can choose the one that will suit you the best.
A payday loan differs from many other types of loans. This is because it is a very short term loan which has to be repaid quickly. The lender tends to allow borrowers to have up to £1,000 until the next get paid when they will have to repay all that they borrowed plus the costs of borrowing as well. The loans therefore, do not last very long. They also tend to be able to be arranged very quickly compared to more traditional loans. The other main feature is that they do not only lend money to people with a good credit record. They are happy to lend to those that have a poor credit score.
Who are They For?
So you may just think that these loans are for people with a poor credit score, but this is not the case. Although this is who the loans were designed for, this does not mean that you should automatically reject them if you do not have a poor credit score. It is still well worth finding more out about them. Firstly, you never know what your finances might be like in the future and if your credit score might change and so if you have a good understanding of these loans and how they work, then you will be able to decide if they will be right for you. It is also worth thinking about the fact that they are very quick to arrange. Some lenders will be able to get a borrower their money within a few hours. This means that you could be able to get money when you really need it fast.
When to Use Them
So there are mainly two situations when a payday loan could be the most suitable loan for you. If you need to borrow a relatively small amount of money and do not have a good credit record then they could be a suitable choice for you. There are a few other loans available for those with a poor credit record so you will need to check whether those will be suitable for you as it is important to compare all of your options so that you can pick the most suitable one. It is also worth noting that you may also find then useful if you need money really quickly. You will find that many traditional lenders will take quite a long time to arrange loans but payday lenders might be able to get you money within a few hours. This will vary between lenders though so you will need to check and compare them. If you have an overdraft or credit card, you will be able to get money quickly, but if you have maxed these out or do not have them, then the payday loan will provide a fast alternative. However, like with all loans, it is wise to make sure that you are borrowing for good reason and are capable of repaying the loan before you take it out.