Payday loan companies typically offer smaller, shorter term loans than mainstream lenders. Accordingly, they may be a source for fast cash that may not be available elsewhere to people with imperfect credit histories or for people who do not wish to go over overdrawn.
They are almost like a cash advance on your next payday, with you repaying the amount borrowed, together with any interest and other fees, on your next payday.
Typically operating online, payday loan companies ask for a few brief details about their potential customers before making a swift decision about whether or not to lend an applicant money.
Some people need to get their hands on some cash fast for reasons as diverse as:
needing to replace an essential household item that has broken; emergency dental bills; not wanting to miss out on a bargain; and needing to buy some electricity or gas before payday. Being accepted for a cash advance
Payday loan companies may typically carry out two kinds of check on their applicants. Firstly, they may check an applicant's identity using an electronic process that marries up the information that you have given with what is held by the system. If you have a permanent UK address, your identity may typically be straightforward to confirm without the need for faxing or posting any additional documents.
The lender may also need to have your bank details, and confirmation that you are over the age of 18.
People typically apply to payday companies for cash advances because they need the money quickly. Accordingly, some lenders may ensure that their online systems deliver a response about the status of the application within hours.
Getting your hands on the money
If your application has been accepted, you may find that you are able to obtain the cash within 24 hours of the making the application. Some lenders may even be able to transfer the money to you much sooner - for example, within 2 hours of a successful application - depending on the speed of their processes.
Of course, payday lenders will charge you for your cash advance. However, with a payday loan, lenders may typically seek to make the charge structure as transparent as possible, with charges expressed in actual figures as well as percentages of the money owed.
You may also find that in some instances using a payday loan company may work out more cost-effective than getting an unauthorised bank overdraft, so it may be worth investigating both options and seeing which offers the most suitable solution for you.
Paying it back
On your next payday, your payday loan will typically be repaid in full, so you can relax in the knowledge that the debt has been cleared and you may not have it hanging over you any longer. Payday loan companies will often obtain details of your bank account at the beginning of the transaction, and typically your authorisation to withdraw the money directly from your bank account when it is available on your payday. This means that they can repay the loan automatically as agreed.
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