What is a payday loan?

2 Minutes Read

A payday loan is a small short term unsecured loan granted by a lender to a borrower with the expectation that the loan would be repaid with the borrower’s next payday check. Some people refer to payday loans as cash advances as they are designed to help the borrower access expected cash in advance before their next payday. The loans are referred to as short term because they usually mature within a few weeks before the next pay day. They are unsecured, because the borrower does not have to provide collateral to collect the loan.

Payday loans are becoming increasingly popular in the UK as a lot of people find it as a quick and hassle free solution to get fast cash when needed. With these loans a borrower who is desperately in need of funds can get needed cash without having to wait until their next payday. This has helped a lot of families and individuals meet up with unexpected surges in their monthly budget.

There are now several payday lenders in the UK offering quick and fast payday loan solutions in several countries. A borrower who is interested in taking out a payday loan should first take time to understand what is a payday loan and how it works. It is also important to shop around for a reputable lender who would not take advantage of your financial situation by charging excessive interest. With a reputable lender, a payday loan can actually help you out in times of financial need.