A payday loan is a short term, easy to obtain, loan that is very useful for those little emergencies that pop up in between paydays.
They are offered in many countries, including the US, and the UK. The rules are generally the same, although there is less regulation in the UK for these types of lenders. Also, the UK lenders discourage “rollovers” that are more or less welcomed in the US.
A rollover extends the loan another period, and are discouraged, because these types of loans have hefty interest rates, and rollover practices are not beneficial to the consumer if they get “trapped” in these fast cash loans.
To apply for a payday loan, you either go into a store and fill out their application, or do it all online at a secure website lender. In most cases you need to provide or show proof of residence, identification, and employment or income, and bank account information.
Many online lenders do not do any credit checks, and neither do many stores. The fact is, you are not applying for credit when you ask for a payday loan; instead, you are creating a loan that is secured either by your written out check, or an ACH electronic withdrawal form that allows repayment directly out of your bank account when it is due.
You may be able to borrow from $100 to $1500 in the US, and from £80 to £750, or up to £1,500 in the UK. Interest is usually 15 to 30 percent on a two week loan, which is high interest of between 390 and 780 percent, or more in some cases.
In the UK, a company needs a consumer credit licence consumer credit licence, which are issued by the Office of Fair Trading (OFT), before it is allowed to offer payday loans to the public.
In the UK, early prepayment is discouraged, but in the US, at some lenders, you can eliminate the entire fee if you repay the loan within 24 hours.
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