What is Payday Loan?

A payday loan is a type of short-term loan in which a person can borrow a small amount of money till his paycheck arrives. You can easily avail this type of loan through high street lenders or different websites available on the internet.However, the interest rate on short-term payday loans is high. Such types of loans are not very friendly as you can end up paying a high interest. There are different short-term loans direct lenders, so you must visit multiple lenders and select the one that offers less interest rate.

Requirements to get Payday Loan:

  • Active Bank Account​

A resident of the UK must have an active bank account.

  • Source Of Income

A valid identification and a good source of income.

  • Age Limit

Age limit for having a payday loan approval is 18 years.

  • Credit Score

The credit score is another important thing in this case. Good credit rating is a sign that a person can repay the amount easily.

  • Repayment Duration

Repayment time is thirty days and sometimes it is directly taken from your bank account when your pay amount arrives.

How does Payday Loan works?

A payday loan is a type of short-term loan in which a person can borrow a small amount of money till his paycheck arrives. You can easily avail this type of loan through high street lenders or different websites available on the internet. However, the interest rate on short-term payday loans is high. Such types of loans are not very friendly as you can end up paying a high interest. There are different short-term loans direct lenders, so you must visit multiple lenders and select the one that offers less interest rate.

Advantages and Disadvantages:

Pros & Cons Of Payday Loan

  • A shortterm payday loan is easy to get, and you can even apply online.
  • As soon as the loan is approved your amount is transferred to your bank account immediately.
  • You can use the lent amount for any purpose such as to pay a utility bill or to overcome sudden medical expenses.
  • Unlike regular loans, payday loans do not need a credit history. Above all, such loans are not secured against your property or vehicle.

Pros & Cons Of Payday Loan

  • The interest rate on payday loans is high as compared to other personal loans i.e rate is almost 400% in this case, while it is 4 to 36% in personal loans.
  • If you will not repay the loan on time and extend the duration, you have to pay an additional fee to the lenders.
  • You can not build your credit with the help of a payday loan. If you are unable to pay the lent amount the lender can sue you in court and you may be in prison for that reason.
  • If you can not afford to repay the amount at once, look for other options and do not go for a payday loan.