All you need to know about the Payday Cash Advance

There is a lot written about companies who offer customers a payday cash advance but the truth is that payday loan providers are simple in principle. They work on a straightforward premise. Recognising that there is a need in the loans market for short term, fast loans, they provide people with funds to bridge a gap in their finances. If you have ran out of money before payday, a payday loan provider can lend you a certain amount which you then pay back immediately when you get your next salary.

The main criticisms of firms who offer a payday cash advance revolve around the higher rate of APR associated with most payday loans. However, payday loans have a higher apparent rate of interest because they are intended to be very, very short term loans. Whilst most ordinary loans can be paid back over the term of a year or more in instalments, or in the case of credit cards, not paid back at all, but instead be maintained with interest payments, payday loans are lent in a lump sum and paid off in a lump sum. That means that payday loan companies who want a decent return on their investment charge a higher rate of interest on their products than a bank might charge on a longer term loan, simply because there is a vastly shorter repayment schedule.

Taking out a payday loan

To take out a payday loan there are some basic requirements. Companies that loan a payday cash advance need their customers to be permanent residents in the UK, over 18 years old, working in a permanent role and earning over a certain salary threshold (usually £800 per month). They also require the potential customer to be paid monthly so that the repayment can be collected from their bank account on the official payday. Other than that, payday loan companies don't usually have any other eligibility criteria and even people with poor credit ratings could be eligible for a payday loan provided that they can guarantee that they can pay it back on time.

Despite the fact that businesses that provide a payday cash advance are willing to consider customers with poor credit ratings, they still conduct credit checks. The reason that payday loan companies conduct credit checks despite the fact that they will accept clients with poor credit ratings is because it is a very quick way in which to confirm someone's identity and it doesn't involve photocopying and posting or faxing official documents or meeting face to face. By checking the identity of the customer with credit reference agencies, payday loan companies can get back to the customer with a confirmation that they can lend them money in a far shorter time frame. If you think that a payday cash advance might solve your financial problems, do remember that you should only commit to a loan product of any form if you are certain that you can repay it when you get your salary.

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