Whilst most of us claim to live within our means, we also recognize that sometimes we spend more than we can afford. In some instances it’s our reliance on easy credit and our inability to recognize that what we purchase today, must ultimately be paid for tomorrow. Yet, there are other instances were we encounter an unforeseen emergency and simply need a little extra cash to get us through a difficult period. When confronted with these situations our options are often limited to credit card cash advances, bank loans, tapping into our personal lines of credit or borrowing from friends and family. Unfortunately, borrowing from friends and family isn’t easy and those other options have exorbitant interest rates, rates that make it nearly impossible to bring down balances. So what else is there? Well, there are payday loans. What are payday loans and how can they help people needing a short-term cash advance? More importantly, can individuals with a bad credit rating and history use a payday loan? They most certainly can!

The No Credit Check Loan

Payday loans are unlike any other form of short-term cash advance. Their main purpose is to allow individuals to borrow money in-between pay periods. However, at no time does the payday loan provider review an individual’s credit rating or history. Payday loan providers don’t base their decision to lend applicants money based on their credit rating. Instead, they base their decision to lend on the applicant’s ability to meet some simple and straightforward criteria.

Simple & Effective Payday Loans

Payday loan providers ask their applicants to provide proof of income, a working telephone number and address, be at least 18 years of age and a legal resident or citizen of the UK, provide a savings account that allows for direct deposit and be employed for a minimum of at least 3 months at the time of the application. That’s all there is to it! If applicants meet these criteria, then they are immediately approved and the money can be transferred to their account within the same day. A copy of the applicant’s pay stub is all the collateral the payday loan provider needs.

How Much Can One Borrow?

Whilst payday loan providers have an approval rate of over 90%, they also understand that individuals must become accustomed to borrowing and paying off their payday loans. Therefore, initial loan amounts will often be limited to an amount between £200 and £300. Once the individual pays off this initial loan, future amounts can be increase to £1000 or more.

The Pros and Cons of Payday Loans

Whilst payday loans are a convenient and inexpensive form of short-term borrowing, they are still loans and therefore must be respected as such. Individuals using payday loans must repay their loan by their next pay period. Failure to do so will ultimately result in additional fees and higher rates. The purpose of these loans is to provide individuals with urgent funds. They are not to be abused. As with any loan, a payday loan will simply add to an individual’s debt load if they fail to make their payments on time. Ultimately the purpose is to cover short-term expenses and not to overextend one’s credit.

Payday loans are a viable alternative to conventional loans, credit cards and personal lines of credit. Whilst most of these financing vehicles require a review of the applicant’s credit rating and history, a payday loan provider simply needs to be assured that the applicant is employed. No credit check is needed. This makes payday loans a solid option when faced with a cash shortfall. However, they must be repaid on time as failure to do so can be quite costly.