What are payday loans and how to get them when you have bad credit?

Payday loans are exactly what the term implies, i.e. they are loans which are provided under the condition that you repay them on your next payday. These loans are usually of a small amount lower than or equal to £2000. The main features of these loans are that they are usually of a small amount, they come due on your next payday. The lender may also ask for access to your checking account or you may have to sign a cheque for the complete balance in advance so that the lender can deposit it when the loan comes due.

Other features of these loans

The other features of these loans can vary from lender to lender and some of them are structured in such a way that they can be paid off in one lump sum. Then again there are the interest-only or rollover or renewals which are quite common. Some of these loans may be structured in such a way that they can be repaid in instalments over a longer duration. The lenders can provide you with cash or a cheque, load the funds into a prepaid debit card, or deposit the money electronically in your bank account.

Payday loans for bad credit

Getting any type of loan can be difficult if you have bad credit and the same applies for payday loans for bad credit. However, it is not impossible and you will be able to find many loan brokers who will help you to get these loans even if you have bad credit score. The best part is that with good loan brokers you can get many different options of loan products.

Pros and cons of payday loans

As with everything else there are pros and cons to these loans. Let us look at them in details

Pros of payday loans

• The process for applying for these loans is simple and the approval is fast. This is because the lenders are only interested in your monthly income and your ability to repay the loan on time
• Most lenders do not ask embarrassing personal questions so long as you are able to prove that you are employed and you will be able to repay the loan
• As long as you are able to provide the necessary documents in time, you will get the money in 15 to 20 minutes
• They are unsecured loans and you do not need collateral against them

Cons of payday loans

• They are not a long term solution because if you miss the repayment of the loan, the consequences can be serious
• These loans are very expensive compared to other options like credit card. Often the APR on these loans comes to as high as 400%
• Sometimes the loan contracts can contain terms and conditions which work in favor of the lender rather than the borrower because of the nature of the loans. This is why it is important to read the terms and conditions carefully

All in all payday loans are a short term solution for a sudden financial difficulty, but should be handled carefully because you will be putting your next pay cheque on line.