PayDay Loan or Cash Advance Loan - A Post Christmas Gift

December to January is the longest period of the year between pay days. Add to that the increased spending over the Christmas shopping season and many people find themselves short of cash in January. Unfortunately Santa Claus does not bring the gift of reduced liabilities and bills in January, but often these bills are even greater.

To avoid falling behind in your commitments, and to maintain your credit score and credit rating, a Payday Loan or Payday Cash Advance may provide the perfect solution. If you are in need of extra cash until your next pay day, you may want to consider applying for a payday loan or cash advance online.

A Payday Loan can be obtained online with no credit check. If you have a bad credit record, this will not disqualify you from obtaining a Payday Loan. The loan proceeds can often be deposited into your checking account the same day as you apply. All you need to qualify is a checking account and a regular source of income, and you can qualify for up to $1000 or more to be deposited directly into your checking account.

Although you can use a pay day loan for any purpose, it is mainly designed to help with your short-term financial needs, and because of the cost of borrowing with a pay day loan, they should not be used as a source of regular lending. The finance costs of Payday Loans are usually higher than a traditional bank loan and should therefore only be used to cover short term financial commitments.

If you do not use the money you get from a Payday Loan carefully, then you could end up in an even worse financial mess. If you are applying for a pay day cash advance to help you pay bills, and you don't pay them, then you will not only be in debt to the Payday Loan company, but you will also still have the original bill you needed to pay.

Payday Loan interest rates vary from company to company. Some lenders will even offer discounted rates for new or returning customers. So it can pay to shop around for the best rates, and comparing pay day cash advance loans online can provide an easy solution to this.

If used correctly, the costs of obtaining a Payday Loan can be worth it to provide you with the cash to keep your existing commitments up to date, and prevent damage to your credit record. The pay day cash advance loan costs may prove to be less than the alternative costs of bad credit repair.

After supplying the Payday Loan company with the required information - usually just your name, address, banking and employment details - you can be approved for a pay day cash advance in as little as one hour and have the money deposited into your checking account the same day. Occasionally you may be required to fax the company your last pay check stub and bank statement prior to approval, but you can still have the funds deposited straight into your checking account the same day. Many online Payday Loan companies no longer require you to fax documents for approval, and you can apply and be approved quickly 24/7. Applying and getting approved is quick and convenient.

A bad credit record should not prevent you from applying for a payday cash advance loan, as there is no credit check performed, and only verification of the information you supply to the Payday Loan Company. Payday loan companies do not check your credit report and in fact the ability to maintain your commitments using the proceeds of a pay day cash advance may actually help to improve or repair your credit report rating, and will certainly prevent any further damage to your credit report.

If you find yourself in the short-term post Christmas cash wilderness, consider an online Payday Loan to assist you until your next pay check arrives.

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Personal loan fact sheet

Types of loans


There are two main types of personal loans: secured and unsecured. Unsecured loans are not tied to any of your assets, but secured loans are - usually to your property, which is why they are often called homeowner loans. If you default on a secured loan, your lender can force you to sell the asset to pay off your debt. Car loans are also secured loans, with the lender using the vehicle you are buying as security for the loan.


Homeowner loans are tied to a property. Photograph: Frank Baron Most lenders offer unsecured loans of between £5,000 and £25,000, although some cap borrowing at £15,000. Smaller loans are available if you shop around, but if your borrowing requirement runs into hundreds of pounds rather than thousands there may be better ways to borrow the money.


If you want to borrow more than £25,000, you will need a secured loan. You will also need enough equity in your property to secure the loan.


Interest rates


The APR (annual percentage rate) on a loan is the amount you will pay in interest each year. Most adverts for loans tend to quote a “typical APR”; you will not necessarily get the same rate of interest when you apply.


Unless you choose a lender with a “one-size-fits-all” interest rate, factors including how much you want to borrow, how long you want to borrow it for and your personal and financial circumstances will all have an influence on how much you pay.


A bank has to have offered its typical APR (or a better rate) to at least 66% of potential customers.


Interest rates can be fixed or variable, and it is important to know which you are signing up for. A fixed rate will remain the same for the term of the loan, which means your monthly repayments will remain the same.


A variable rate will be subject to change, usually in line with the Bank of England base rate. While this is good news when rates are falling, it can be worrying if rates go up and you need to find more money than expected to make your repayments.


Repaying your loan


Most loans are repaid in monthly instalments & usually by direct debit - over a period agreed before you get the money. The lender will tell you how much you need to pay each month when it agrees the loan.


The repayment period is usually fixed and you will have to pay a redemption penalty - for example, two months’ interest - if you want to pay it off sooner. The longer the repayment period, the more interest you will be paying, so go for the shortest you can manage.


Flexible loans, which let you borrow and pay back at will, are becoming more common, but the interest rate charged is often significantly higher.


If you miss a payment the lender will record the default on your credit file. Any new lender may not be put off by one or two missed payments, but if you have missed several you may struggle to get credit elsewhere.


Where to get a loan


The list of organisations offering loans is long and ranges from high street banks, to those that operate only on the internet or telephone, to building societies, credit unions, specialist loan companies and even doorstep lenders.


Typically, cheaper deals are offered by the specialists and internet banks than are available on the high street, but this is not always the case so you should shop around, either online or by contacting lenders to get quotes.


Some Doorstep loans have interest rates as high as 900%. Photograph: Garry Weaser Possibly the most expensive form of credit is offered by doorstep lenders. Unlike mainstream lenders, they will often offer sums of less than £50 - typically used to cover unexpected purchases - and collect payments weekly. However, APRs can be as high as 900% so borrowers who have a choice will tend to avoid them.


Credit unions are an alternative to mainstream lenders and can be an attractive option for some borrowers because they cannot charge more than 2% a month on the reducing balance of the loan (an APR of 26.8%), and most charge just 1% a month (12.7% APR).


Most credit unions offer unsecured loans for up to five years and secured loans for up to 10 years.


Getting into difficulty


Sometimes things go wrong and it is difficult to meet your monthly repayments. If this happens to you, do not ignore letters arriving through your front door.


The best course of action is to get in touch with your lender immediately. Banks and building societies are often willing to help and might offer to freeze the loan temporarily or extend the repayment period.


Their ultimate aim is to recoup their money, but it is usually more advantageous, including cheaper, for them to reschedule your repayments than to take action against you.


It is particularly important to be upfront with your lender if you have a loan secured on your house or another asset, because if things go wrong you may have to sell up to pay back the loan.

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