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What are Payday Loans?

Payday loans are a way of quickly borrowing cash for a short period of time - usually until your next payday.

Most traditional loans take time to organise with banks. They are also usually for larger sums of money (over £1000) and are paid back over a longer period of time. They can also sometimes be difficult to get if you have a poor credit history or CCJs (county court judgments).

Payday loans are for much smaller amounts - usually up to £500 and are only for a number of weeks rather than months or years. You will usually be expected to repay the loan when you receive your next pay check.

How do payday loans work?

Taking out a payday loan usually starts with a simple online application form.

Most payday loan companies don't issue credit checks on you so there's no need to worry if you have a poor credit history. They will usually require that you have a job and a bank account that the loan can be paid into.

Once you have been approved for the loan, the money will be paid directly into your bank account so that you can access it just as you would with your other money.

The loan will usually last until your next pay day. The amount due (the amount of the loan, plus a fee) will then be directly taken from your bank account, just like a direct debit would. You need to make sure that there is going to be enough money in your bank account to cover both the loan amount and the fee.