Payday Loans

Online payday loans are a quick and easy way to get fast cash when needed, especially in an emergency. For example, if one of the Credit Score Crew needed have his/her car or house repaired or have bills that need paying immediately, he could use a payday loan as an effective way to get the cash advance needed. In many cases a payday loan is a cheaper alternative for individuals, who might otherwise be forced to pay costly bank penalties, unpaid bill charges and credit card charges.

These loans can be called ‘Payday loans’ as generally they are short term loans offered to individuals who have a job, but need a fast loan before their payday arrives. The loan is usually expected to be paid back in full when the individual receives his/her salary, typically within a 30 day repayment window.

You can normally get between £50 and £750, and this can often be in your account within a day, in fact some lenders offer one hour deposits. You must have a job and a valid bank account.

The lender will normally charge a fixed fee per £100 borrowed and the loan is repayable on your next payday, regardless of when you apply. Payday loans often help people who have bad credit and can't get credit elsewhere. Used sensibly they can be a viable credit option.

APRs are a standard way of comparing financial products but they are not effective when comparing loans with differing payment terms.

Type of loan Amount Months Total Repayable APR Actual Interest
Installment 500 36 776.81* 36.18% 55.36%
Installment 1000 60 1885.71* 32.98% 89.90%
Overdraft 25 1 50 409500% 100%
Pay Day Loan 500 1 625 3762% 25%
* Fees may vary          

The table above illustrates APR's for two installment loans which are the same but the actual interest repaid as a percentage of the loan is significantly different. As you can see the actual percent interest is much lower with a payday loan.

Comparing a payday loan against an unauthorised overdraft shows a major difference in APR's . Banks do not have to quote APRs for charges on unauthorised borrowing, the table above illustrates the APR incurred for going just £25 over your overdraft limit and incurring a bank fee of £25. Because of these comparison difficulties we always refer simply to the amount you repay rather than an APR equivalent.

CeeJay and the Credit Score Crew would like to remind you that a payday loan is a short term loan or cash advance until your next payday. Payday loans are designed to bridge the gap until payday; they shouldn’t be used as a long term solution to your borrowing needs.

If you need a longer term option then you should consider either a secured loan or a personal loan.

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