Payday loans are a form of short term loan based on the recipient having a job that pays every month above a certain amount. Since they are given out on this basis, you can get a payday loan from Payday Loans UK without having to go through a credit check. So even if you have bad credit you can get a payday loan. This does not mean that they should be used as a substitute for a normal loan however, as over time the costs of a payday loan rise quite quickly. For a short term loan however, whether you have good credit or bad credit they are an excellent option in emergency situations.

You can always get a payday loan, regardless of your credit history.

In fact payday loans can be viewed as a way of getting emergency cash quickly. As there are no credit checks the application process is very fast and the money can be transferred to your account within hours of being approved. Whatever the emergency situation may be therefore, a payday loan can help whatever your previous financial situation was. Even if you do have a good credit history, you might still need a payday loan every now and then just to get you through to the end of the month. The actual amount of interest that you have to pay will be about the same as a normal bank loan, but you can get it out of the way quickly with payday loans rather than dragging it out over a year or more.

It is only with longer term loans that credit checks are necessary because they show how reliable a person is at being able to pay back a loan over a long period of time. There are many more challenges that you can face doing it this way, for example there is more chance that you will be made redundant over the course of a year than there is in a matter of weeks. A credit check will not reveal these risks in any case, so they are really not necessary for payday loans.

As already stated however, a payday loan is not suitable for long term needs. Not only because the arrangement is that they should be paid back after you are next paid but because the interest rates are higher. This is okay over the short term because it just evens it out. If the interest rates for short term loans were the same as they are for long term loans then taking out a short term loan would be extremely cheap, in fact too much so for lenders to be able to operate. Also, there would be no incentive for them to be paid back on time meaning that in most cases they would be short term loans in name only.

In short, the reason that payday loans can be offered without doing a credit check is that the interest rates make it a good idea to pay them back on time. The advantage of this is not that they should be used as a regular loan for people with a bad credit history, but rather that they can be taken out quickly by anyone, regardless of their credit rating.

Tags: bank loan, credit check, credit history, credit rating, emergency cash, interest rate, long term loan, Payday Loans, Payday Loans UK, short term loan

Written by sSeaborn

Samuel Sandrock has a degree in Economics and is an expert in financial matters. He likes listening to country music and playing squash.

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