web stats

Cash Advances in the United Kingdom


A cash advance is a small sum of money given to people who need urgent cash quickly. This money is given for a month or less and the loan borrower has to pay a certain amount of interest on it. These loan companies have attained a lot of fame within the United Kingdom.

Several employed people take them when their earned salaries fail to cover all their expenses. These financing options have both advantages and disadvantages. Thus, people who are applying for cash advances should consider both sides. A high-interest rate seems to be the only disadvantage of payday loans.

Payday loans Are Small Sums of Money

It is obvious that they are not sufficient enough to buy cars or big houses. You have to get a long term bank loan for these purposes. Cash advances are meant for different purposes. With the help of payday loans, you can handle all kinds of short term expenses including buying computer accessories, music systems, electronic gadgets and various other commodities.

It is not necessary to apply for the highest loan limit. You can even get a loan of as low as 80 pounds. As soon as you get your monthly salary, the payday loan firm would make the necessary eliminations online. The process is very convenient and easy to implement. Cash advance companies require every applicant to go through a small application process.

The applicant does not have to fill a lot of particulars. All he needs to do is mention his name and a verification of his age. This facility is not applicable to people who are less than eighteen years old. Along with that, the employment status matters a lot.

Unemployed who do not have an earning source are not eligible to apply. This is because the cash advance company does not have surety for repayment.

The Weekend Approval of Payday Loans

Payday loan companies have earned an immense amount of fame since they are providing immediate or instant cash loans to their borrowers. Although the sums of money attained are very small, they are transferred within an hour or more.

Numerous people are handling their personal financial expenses through this option. You can get a maximum sum of £750 through the payday loan advantage. At the moment, these companies in the United Kingdom are stormed with loan requests.

Due to the high amount of interest shown by many people, these services have increased their work timings to support that request. Such companies are now running their operations on weekends as well. Now, if you need quick cash on Saturday or Sunday, you do not have to wait till Monday as you can submit your application at all hours.

This 24 7 service is expected to enhance the profits of payday loan companies by a very large margin. In addition to that, the maximum loan limit has also been increased. The companies which had previously been offering the highest sum of one thousand pounds have increased this figure to twelve hundred pounds.

This is very good news for people who are seeking a reliable source for quick cash. However, this mode of earning money has a very big problem attached to it. The interest rate charged by these companies is very high. In some cases, it is much more than banks. These companies allow you to take a very small sum of money for a very restricted time period.

Hence, they do not have a lot of time to earn the profit. Thus, the interest rate applied by these companies is very high. However, you do not have to pay a high sum of money if your dues are timely cleared. Payday loans are a good way to cover your urgent expenses.

People Criticizing Payday Loan Companies

Some of the people in the United Kingdom have both positive and negative opinions about payday loan companies. For instance, some people this option because it is convenient and the taken amount can be easily paid off. In most cases, payday loans are deducted from the salary of the loan taker.

You do not have to wait for months to get the money. The transfer is very quick and you can get the money in sixty minutes or even less than that. The maximum duration for the transfer is one day. As soon as your application is processed and the loan company completes the verification process, the sum is credited to your account.

This is a very simple process before you don’t need to go through a full scaled documentation process. These were just the advantages. Now let’s have a look at the negative factors. The biggest problem with payday loans is the interest rate. Some of the rates are high to the point of an unbelievable limit in the eyes of some.

Absurdly High-Interest Rate

A few lenders in the United Kingdom are even charging interest at beyond a rate of 271%. In addition to that, other lenders are earning very fat profits by taking interest at a rate of 4000 percent. Loan borrowers are paying more than they have taken in the form of interest if allowed to roll over.

A lot of British residents and some from other countries have criticized this circumstance. According to those affected, the interest rate increases by even more than hundred percent one day after the due date. This is when payday loan companies get a chance to charge interest at any no specific rate.

These findings can be damaging to the Industry and it can cause some people to lose trust in them. These lenders are promoting their services on a very large scale. On the streets of London, you will find several billboards and banners of these cash advance firms.

UK Customers Benefit from Payday Loans

For struggling UK residents, payday loans are becoming commonplace, but for those who have never used them, the topic can be intimidating and confusing.  Cash advances have a somewhat controversial reputation.  And with interest rates in excess of 1700 percent APR, perhaps this is unsurprising.

The reality, however, is that more than 1.2 million people in the UK have chosen to take advantage of payday loan services, 44 percent of whom are struggling just to get by.  The payday loan industry is worth an estimated £1.2 billion in Britain—and there’s a good reason for it, as we’ll explain in just a moment.

Not familiar with payday loans?  A payday loan, also known as a cash advance, is simply a very short term loan which customers can take out in case of emergencies.  Payday loans are generally for very small amounts (£500 for example), and usually, are taken out for time periods ranging from one week to one month.

The interest and fees for these loans can be very high, but this is because the loans are available on short notice, and even customers with poor or no credit may be able to use them.

payday loan

Customers can apply for payday loans online, which makes them convenient and accessible (this can be very beneficial if you don’t have enough money to travel around looking for a local payday loan outlet, or if your car is in need of repairs).

A quick application process asks for some basic information.  Most online payday loan applications take only a few minutes to fill out.  Approval may take a couple hours or a couple of days, though some companies like Pound Access are able to approve applications in minutes.

Customers sign an online loan agreement (which includes not only the amount of the loan and the term but also the interest and fees), and then the money is sent directly to the customer’s bank account.

Since the money is immediately available, customers can use it to deal with emergency situations right away—instead of wait for a traditional loan application to get approved, which can take weeks or even months.

How do you pay back a payday loan? 

The payback process is automatic.  Once the end of the loan term is reached, the lender automatically withdraws the amount of the loan and interest from the bank account.  That’s why it’s critical to make sure that you only use payday loans in genuine emergencies, and not as a routine.

Sometimes payday loans are criticized for creating a cycle of debt.  What creates a cycle of debt is using a payday loan each month to cover expenses, building up more and more interest debt.  Payday loans are only intended for use in select emergencies—not as a replacement for a steady stream of revenue.

How do payday loans in the UK help customers to get by?  As an example, picture a week when your paycheck is late.  Perhaps your rent is due that week as well, and while normally you could cover it, this week you can’t.  If you don’t pay your rent on time, you’ll be evicted.

In this situation, paying the interest on a payday loan would be worth it, since you’d save yourself from losing your home.  Ultimately, that decision would save you money.  Or perhaps your car has broken down and you won’t have the money to repair it until next week.

If you don’t fix the car, however, you can’t commute to work and earn the money you need to fix it.  By taking out a payday loan, you can fix your car and continue to work.

Payday loans in the UK have become a widespread phenomenon for just this reason.  During the recession, many people have struggled to get by and pay their bills on time.

Fully responsible, hard-working people can have trouble qualifying for traditional loans, and traditional loans often don’t get approved fast enough to cover expenses in an emergency.  Cash advance companies recognize the need to provide assistance to customers in these situations.

Payday loans can provide a solution for people in this situation and can enable them to get on with their lives and get back on their feet.

Myth vs Reality of Short Term Finance

With Christmas looming many people might be thinking of ways to make the period a little less stressful and easing the financial strain is usually the best way to do this. But these days it’s harder than ever to get loans from the bank, and short term finance solutions are never the way to go, right?

Well actually there are a lot of myths surrounding short term loans, let’s take a look at the most common myths that arise with this topic, and you may just realize that a short term loan is an easiest and safest way to relieve a potentially stressful Christmas.

payday loan online
payday loan online

Payday Loans Come With High Interest Rates

One of the most common myths surrounding short term loans is that they come with incredulously high interest rates, and sure a payday loan lender has costs to cover if they lend to an unreliable source, but the interest rate on a payday loan is actually very reasonable.

They come at a flat rate which is clearly explained to the customer, yet some bank loans incur sneaky charges which aren’t always well explained, plus the fees for not repaying your payday loan on time are much less than those charged by the bank or credit card company.

Payday Loans Trap The Lender

This isn’t true, because most payday loans are legally required to be paid on the lenders next payday, hence the namesake, and hence the fact you won’t incur roll over charges, because payday loans don’t allow you to roll over, and in most cases there is a limit to how many times you can increase the repayment date, so how much of a trap is that?

Short Term Finance Lenders Take Advantage

Every payday loan company is regulated by the financial authority of the country you are in and as such, impossible to pay back loans, interest rates that aren’t affordable; leave them to the loan sharks because this is the biggest myth out there.

It’s also a myth that these lenders are taking advantage of the poor, the elderly, and the uneducated; because studies show that most people who take out these loans are the opposite. If you understand the simple fees attributed to a short term finance loan and can repay on your next payday, then this really is the loan for you. Lenders aren’t taking advantage, they’re providing a service.

Payday Loans Should Be a Last Resort

They may have been invented for this kind of target market, but it simply isn’t the case anymore. Payday loans have such simple terms that they should be thought of before a bank loan since the latter is hard to get nowadays and incur large charges if you miss a repayment.

As always with loans of any kind, it’s important to understand what you’re getting into when you sign the piece of paper. But it should be understood that short-term finance comes with a lot of myths attached, and if you can dispel those myths, you might just find your Christmas payday solution is a lot less stressful than you think.

What Are 5 Reasons a Payday Loan Are Just Right For You?

Loans have never been so important as they are these days. The worldwide economic slowdown has rendered many jobless and businesses struggling to keep their operations going. All this has created a huge pressure on the livelihood of people who are leading their life’s from paycheck to paycheck.

payday advance
payday advance

Any shortfall or cut in the salary can see people worried about the payment of their debts which were never in proportion to their income. All this meant that there was a scarcity of money and they had to take new loans which they could get almost instantly without much documentation so as to be able to meet their expenses.

Payday loans were designed for the same purpose where the borrowers with less than perfect credit score could get loans almost instantly within a few hours from application. Let us look at the reasons why payday loans can be the right thing for you.

1. It’s convenient

With the online loans, one can get the entire process completed within a few hours of time. Starting from the application for the loans for bad credit to the repayment of the same can be carried out online right from the premises of your home.

All you need to do is to click on the links, follow the instructions and that is all that is required to be done. You save on your time and hence money. Getting the loan amount is extremely easy as you can get the money in your checking account directly.

2. It’s fast

The moment you complete and submit the online application, you will get to know the exact amount and the details of the loan for which you have qualified. The communication is extremely fast and you can get the approvals by means of e-mail, SMS or phone calls from the concerned lenders.

One does not require signing up too many documents nor they would be required to write a check for the same. The entire process can get completed within a few hours or at the most 24 hours if you have all the documentation and the credentials in place and the lenders are convinced that they would get the money back as per the agreed terms.

3. It’s private

Any information related to the lending and the personal information of the borrowers should always be kept confidential. In the current times, the pertinent information is the key to taking any decisions related to your finances and hence there are a lot of frauds which have been planned around this.

Keeping your information safe requires you to deal with the online lenders who are reputed and use secure internet gateways which are used for the transactions related to lending.

4. Quick approval

Payday loans are the loans which require no documentation, are quick; just to name a few benefits of these loans. However, another aspect which is also important is the freedom to use the money you take as loans for any purpose you like.

Since these loans are for the short term and the amount is small, you can use them to pay your utility bills, trips or purchase online items. You are in no ways required to provide any details to the lenders for the same. You can always use the money to save yourself a lot of money in the form of late fees on other loans.

5. Apply and qualify anytime

Getting payday loans by any means is not a lengthy affair. One can apply for these loans any time of the day, 24/7.

With the online applications you can get them in the business hours from the comfort of your office or even after the office hours from the convenience of your home provided you have the complete understanding of the way your requirements are placed and your comfort when it comes to making the repayment of the same within a really short notice which can be anything like 7 days or 15 days.

Listed above are the five reasons which seem to be the one most commonly used by the borrowers for taking the payday loans. However, you need to understand that there can be several other reasons which are just the right ones for taking these loans.

Bad Credit Management Can Disqualify You for Payday Loans

The fact remains that financial uncertainties are a common occurrence in modern days. There can be a number of reasons behind the unexpected financial stress that an individual may have to face in his/her life.

A few of the reasons include unexpected employment loss, divorce, and huge medical expenses. A majority of all individuals rely on payday loans for bad credit management.

payday loans
payday loans

High Interest Rate Charged

However, there is no point in believing that these types of loans can always suit your purpose in an intended manner. There are a few reasons that will force you to believe the same. The first and foremost reason behind the same is the involved higher interest rate.

The interest rate that associates with payday loans is approximately within the range of 30-50 percent. The fact that the amount of time that is specified to the lender so as to repay the loan is extremely short is one of the other reasons as to why; payday loans do not always make a wise option.

Disadvantages That Remain Associated

You will be alarmed in knowing that the time specified to repay the loan is sometimes as less as 14 days. The stipulated time period combined with the high rate of interest causes the pressure to mount in an enormous manner; thus making it extremely difficult for the lenders to repay the same.

It is always possible to enlist a few of the possible reasons that do not make payday loans for bad credit a preferable option. Some of the causes can be enlisted as below:

  • Limited Size of Payday loans
  • Excessive High Interest Rate
  • Extremely Short Term

Few Positive Factors

However, it is important to make it amply clear that payday loans for bad credit management do not always make bad options. There are cases when you can expect to enjoy a few advantages. The fact that these loans can be accessed within a short period is one of the encouraging aspects that appeal to a strong base of all lenders.

You will get encouraged in knowing that there are a few cases when you can expect to seek approval of these loans within a short period of no more than a single day. There are cases when you are in need of cash so as to combat unfortunate situations. This is exactly where you can find these loans to be of real worth.

A majority of all lenders hold the view that bankruptcy is the only viable option as far as tackling with an impossible financial situation remains concerned.

However, there is no point in believing so as there are a few options that can suit your purpose in an intended manner. If you can secure a consolidated loan, it is always possible to avoid the declaration of insolvency.

Opting for the above-mentioned process can certainly offer you a constructive solution by means of putting an end to all debts in one single chance. If you desire to benefit to the ultimate extent, consider the option of investing a considerable amount of time in considering a consolidation loan.

Warren Paine

Warren is the senior mortgage loan officer who has worked in mortgages and loan industry since 1995. He study in Harvard and major in Finance with a Bsc. Honor Degree. He possesses a Paralegal Certificate as well.

Recent Content