What is a ‘Payday Loan?’

A payday loan is a short term financial loan usually covering a duration of a month or less and is so called because they are often taken out in order to keep the borrower ‘ticking-over’ until payday.

What are the benefits of a payday loan over other forms of available credit?

Payday loans are quick and easy to acquire, one can usually be obtained in a day or less either by filling out an online application or by faxing off a form, the borrower’s credit rating is not taken into account plus the funds can be transferred directly into the borrower’s bank account within several hours or less.

What are the drawbacks associated with obtaining a payday loan?

The payday loan is considered as something of a last resort in terms of obtaining financial credit, generally those who apply for a payday loan will be unable to obtain other forms of credit such as credit cards or overdrafts or that these channels have already been exhausted by the borrower.  The payday loan offers many advantages in terms of the speed with which they can be obtained and the lack of credit checks made, however these are balanced out much higher then usual (when compared to other forms of credit) interest rates.

Generally speaking the shorter the loan is required for, the higher the interest rate placed on the short term loan.  Short term payday loans usually command an interest rate of around 400% APR (Annual Interest Rate) which works out along the lines of $20-30 interest paid on a two week cash loan of $100. 

Am I entitled to receive a payday loan?

Generally speaking anybody with access to an open bank account in at least relatively good standing will have no problems in obtaining a short term cash payday loan.  Lenders do not conduct full credit checks on borrowers or attempt to determine whether the borrower is able to repay the loan, the high interest rates associated with payday loans to the lender reflects this risk.

Where can I get a short term payday loan?

Providers of payday loans are to be found in most towns and cities throughout the developed world in one form or another and are often recognisable by neon signs etc. advertising their services.  These days however payday loan companies are just as likely to be listed within your local telephone directory and some of the best payday loan offers will be made available to the borrower via the highly competitive internet.

Please remember however that whilst some of the best deals are to be obtained via the internet that when entering into any financial arrangement with any organisation via the World Wide Web that it is vitally important to first check that they do indeed have a physical address or office.

How do I get the best payday loan?

There are several steps you can take in order to ensure that you get the best payday loan deal to suit your needs, these include:

How to Choose the Best Payday Loan

(1)   Check your options - As with most other services especially online there will always be a variety of companies competing to offer you the service or sell you the product.  Interest rates may well vary considerably between different lenders so remember to check out as many as possible and compare the interest rates and any other charges that may be applied before signing up to any particular lender.  The interest on payday loans is high, even a slightly lower rate can result in a considerable saving on your repayments.

(2)   As suggested above many short term cash loans and payday loans will also be subject to additional charges on top of the interest charged.  It is extremely important to be aware of these charges and to compare the charges set by each provider before signing up.

(3)   In addition to interest rates and additional charges it is important to be aware of additional repayment terms associated with your payday loan, especially with regards to the loan duration.  Try to be sure before acquiring your loan that you will be able to pay it back within the time set out; failure to pay off a loan early will not usually result in any kind of penalty, but failure to pay back the loan within the allotted time with no doubt result in additional expense.

(4)   If possible do a little research into the service offered by the payday loan provider you are considering before applying.  Often a quick search via the internet by typing the payday loan providers name into your search engine will be enough to turn up a review of some kind, and should you find hundreds of web pages discussing the poor customer service provided by the company you were considering you will know to go elsewhere for your short term cash loan.

(5)   In addition to your above checks, having previously established the payday loan providers physical address contact that areas ‘Better Business Bereau’ (BBB) to check that the loan provider you are considering is operating as it should be.

A short term payday cash loan can be a considerable financial obligation and should not be rushed into, do your research and by following the steps listed above they will help to ensure that you as a borrower receive the best payday loan conditions available to yourself.