If you are short of money and are in a panic about paying a bill immediately, you may have heard that you can apply for a payday loan to help you out of your predicament. However, how do payday loans work?
Payday Loans Overview
A fast payday loan is a short-term cash advance against your next wages. Once you have been paid your salary, you repay the instant payday loan.
How to apply for a payday loan
To apply for a quick payday loan you need to have:
- Evidence of wages being paid to you – i.e. your pay slip;
- Evidence of a current account – i.e. you bank statement, which needs to show that your wages are being paid into your current account;
- A utility bill – e.g. your electricity bill.
Once you have these, you go online and find a lender that is willing to advance a payday cash loan.
Note, if you have a bad credit history this will not stop you applying for a fast payday loan as a no credit check payday loan is a short-term cash advance, rather than a long-term loan.
Repaying the fast payday loan
Repayment of a payday cash loan could not be easier. On your next payday, the loan company will send you a note authorising them to withdraw the money from your current account. The only downside is that the repayment terms are usually very short-term, approximately 14-18 days after you have received the money; so, if you’re paid on a monthly basis, rather than every 2 weeks, you may need to discuss this with the lender.
Things to keep in mind when applying for a quick payday loan
There’s no doubt about it, instant payday loans do serve a purpose. However, you should keep in mind the following things:
- A payday cash loan should be used to cover emergency situations only, it should not be part of your long-term borrowing strategy;
- Instant payday loans can be expensive, with fees and high interest rates;
- You’ll be required to repay the instant payday loan on receipt of your next salary, so make sure you have enough cash in your account to meet this obligation;
- Try to make sure you borrow enough to cover your immediate needs, but not too much as it will become more difficult to repay the payday cash loan and survive the next month.
If you do your homework online, finding an instant payday loan you can easily repay is a good way to overcome your current financial crisis.