Payday Loans, UK Finance and Loan Information

There are so many different kinds of loans available out there, so lets begin by discussing the 2 more common loans on the market: Secured Loans & Unsecured Loans

There are many different kinds of loans that you can apply for today and they are available from numerous sources. The most commmon loan is a secured loan This is secured against something tangible, like your house. An example of a common secured loan is a Mortgage. As with all mortgages, if you fail to keep up repayments the lender is able to implement legal proceedings to repossess the property that you have borrowed the money against.

"But the house is mine!" - Lot's of people think they own the house they live in, but if you have a mortgage, it's the bank that actually owns it!!

Your mortgage is the largest debt that you will accrue over your lifetime, and with the current global economic meltdown, the big lenders are tightening their purse strings and declining borrowings for applicants. Also, whereas once first time mortgage applicants could get 100% mortgages, this is no longer the case and this has slowed the housing market down considerably.

This has stimulated the rental market considerably and more and more people are renting houses and this is following the trend of our European neighbours, where renting property is more frequent.

An unsecured loan is essentially, what is says in the title, it is a loan that is not secured against anything. So the money is lent to you on the basis of your financial status. Although the loan is unsecured, as with all money that is borrowed from financial providers, it is important to make sure you are able to repay the money accordingly.

An example of an unsecured loan is a payday advance. This is a small, short term cash loan that is lent to you on the basis that you are in employment and able to repay the money back when you get paid. There has been some stigma associated with payday loans as they were deemed to be a 'sub prime' lending. However, as the criteria is more rigid now with payday loan applications, this has since disipated. Essentially, you need to be and indeed, prove that you are in employment to prove that you can get the loan, prior to being accepted for the loan.

The main difference between traditional, unsecured loans and payday loans is that the money is paid back over a much shorter period of time. With loans from banks, you can get unsecured borrowing up to, for example, a period of time of 60 months, which is 5 years. The payday loan is lent to you on the understanding that the money is paid off when you next receive your payday, so it is over a much shorter period of time.

Other names for payday loans are 'No Fax Payday Loans' - this is a quite dated name for the loan, but as the title indicates, the loan does not require any paperwork to be faxed to the lender. With the advent of modern technology and more advanced cash loan application forms there is no need to submit a hard copy of any paperwork to the lender.

APR can be confusing, so here's what the FSA say about it...

"APR stands for the Annual Percentage Rate of charge. You can use it to compare different credit and loan offers. The APR takes into account not just the interest on the loan but also other charges you have to pay, for example, any arrangement fee. All lenders have to tell you what their APR is before you sign an agreement. It will vary from lender to lender."

The interest rates are generally quite high for most payday loans - If you needed,say, £200 you would have to pay back £250 and pay £50 interest.

As with all loans though, if you cannot afford to repay the money, then don't borrow it. There are many good places you can go to, to get FREE debt advice such as Citizens Advice who you can contact here or a debt plan on Money saving expert can be found here

When you search for debt online always watch out for the Google PPC adverts pushing Free Loans Advice, as many of these companies DO NOT offer debt advice, they will simply be trying to get you to sign up to one of their own loan arrangements.

With a Payday Loan the cash is only lent to those in employment and therefore should have a better chance of being repaid. But DO NOT BORROW if you cannot afford to repay and get financial advice from the CAB.

So what is the crack with the payday loan. Ohhh it's bad, very bad I hear you all say. Well, yes, it can be bad, but so can any loan that you take out, if you don't make the repayments and the simple answer is, if you can't afford to take the loan out in the first place, then, really, don't even bother applying for one, you will get stung in the long run.

So if you are contemplating delving into the alledged 'murky' waters of payday loans think a few things through first. I would say this is the top 5 things you should think about first:

1. Can you afford to Pay the Cash back?
2. Do you really need the loan?
3. Can you really, really afford to pay the loan back?
4. If you are seeking to consolidate debt, have you thought about seeking FREE help?
5. Are you borrowing for an emergency - Have you asked freinds and family?

Payday Loans are good to get you quick, unsecured cash paid into your bank account rapidly, but always think long and hard about whether you really need to borrow the dough in the first place!