During a continued economic downturn there can be times when a monthly wage payment doesn't quite stretch to the end of the next month. If an unexpected bill comes in, the car suddenly needs work, or if your overdraft is used up, a short-term loan can offer a lifeline until your next payday. Bank loans can be expensive and take a while to approve, and you may require a smaller sum than the minimum loan amount. So, if you need just a small amount of cash quickly, you may consider taking out a payday loan.



Payday loans are smaller in sum and are generally based on the amount you earn each month. They can be a quick and easy alternative to increasing your credit card debts, but there are some things that you will need to consider before opting for this particular route.

Payday loans, as with every other type of credit loan, have certain criteria. You must be over 18 and a UK citizen to be eligible to apply. You must also have a bank account which your wages must be directly paid into and which must have a debit card facility. Finally, your credit rating must show that you are not a ‘high risk' customer. If you have a poor credit history, this may affect your ability to qualify for any form of loan, including a short-term payday style loan. If you fail to meet any of these criteria, you will probably be unable to apply for a payday loan. They do not take into account whether you are a homeowner or a tenant so, unlike other loans, this will not affect the final decision.

Payday loans are small amounts, based on your average monthly take-home pay. They are rarely for more than £800, and are calculated on your ability to be able to pay the amount back with your next wage. Therefore, if your monthly earnings are only £800, there is no chance that you will receive a payday loan for that amount, as it would leave you with a zero balance on your next payday. You need to calculate the interest charges into the amount you will have to pay back when deciding whether to apply for a payday loan and how much to borrow.

The most important consideration if you are thinking about taking out a payday loan is; can you afford to pay it back? If your financial needs are more long term, it may be wiser to think about alternative loan facilities, either with your bank or through another source. If you can afford to pay the amount back comfortably without leaving yourself financially short the following month (and so repeating the cycle), then a payday loan may be an ideal, short-term financial solution.

If you are looking for a quick and relatively small injection of cash into your bank balance until your next wage comes through, then a payday loan may be your best option. Just be certain, before you apply, that you meet all the requirements and are absolutely sure that you will be able to pay the money back when the loan period ends.