Are Payday Loans a Good Way to Borrow?

Payday loans are as popular today as ever, especially thanks to the hard-line approach that most banks are taking on loan seekers.  Getting approval for a normal loan is harder today than ever before, so many borrowers are looking for a new way to access credit.  Payday loans have been on the market for a few years now yet are still met with questions – are they a good idea, do they lead people into the so-called debt cycle? 

A payday loan is a fast cash loan offered by a large number of independent companies.  They are available in the UK, USA, Australia and many other countries.  The idea of a payday loan is that it covers you until your next payday.  Therefore, the loan period is rarely more than 31 days – meaning that this loan is designed for cash emergencies.  Most payday loan companies offer between £80 and £800 although the amount varies – some companies offer as much as £1,000.  Most people are eligible for a payday loan, as no credit checks are carried out.  In other words, even those who have a bad credit rating, have CCJs, arrears and defaults will still be able to get the loan. The actual eligibility rules generally just cover age – applicants must be at least 18 years old – and that the applicant has a form of regular income.