When we think about taking out a loan, we usually think of the bank lending us money.  In a sense of course that is true.  But in a way, it is taking out a loan against your own future earnings.  With payday loans, the short time frame makes this very clear.  You are taking out a loan against your next month’s salary payment.  Most people are not able to get an advance on their paycheque at their work.  Payday loans are the closest most people are able to get to it though, and that is what we provide at Payday Loans UK.

Borrowing From Your Future Self

Naturally, if you are taking out a loan there is going to be a risk.  There is a risk to the loaner that you are not going to be able to pay the money back.  That is why we have credit reports, banks want to know the likelihood of you being able to pay back the loan based on your track record of paying back loans in the past.  At Payday Loans UK however, we do not check credit history.  The reason is not that we are not concerned if you pay back the loan, or that we want you to rack up a huge amount of interest.  The reason is that it is only a short term loan, that you are borrowing based on your next month’s paycheque.  Credit reports will mostly be based on loans that have been taken out over a long period of time.  Lots can happen over a matter of years that will prevent you from being able to pay it back, but it is far more likely that you will be able to pay back a loan if it is only based on a month’s work.

That is why it is not really fair to compare ordinary bank loans, which are supposed to be paid back over many months or even years and a payday loan.  If you do compare a bank loan and a payday loan however, then you will find that the actual amount you have to pay back with a payday loan is almost always less than you would with an ordinary bank loan.  If you look at the APR (Annual Percentage Rate), then it will be much higher, but payday loans do not (or should not) operate annually.  In fact banks have a similar system to a payday loan, which is called an overdraft.  And unplanned overdraft charges cost a lot more than a payday loan.

It really comes down to the fact that with payday loans you are borrowing against your future self, your future earnings.  If you have a permanent job that is paid monthly and it pays over a certain amount, then you can get a loan with Payday Loans UK.  There are all sorts of situations when you need money fast and you can’t afford to wait until your next paycheque.  It does not mean you should borrow beyond your means, as many bank loans actually turn out to be, in fact it is quite the opposite.  It is a simple cash flow problem, and that is what payday loans are here to help with.

Tags: APR, bank loans, borrowing, Payday Loans, Payday Loans UK

Written by admin

Ken Heading keeps up to date with all the financial news in the UK, particularly as it affects payday loans, and enjoys writing on this subject.

Comments are closed.