Unlike other forms of credit, payday loans do not require applicants to pass a credit check in order to be approved for a loan. This means that unlike other loans or credit cards, payday loans are available to people who have a history of bad credit as well as those who have a poor credit score simply because they haven’t used credit before.

Credit checks are carried out in order to reduce the risk undertaken by the lender but they also exist to prevent those who are already in debt from getting themselves into further debt. For this reason, some critics have argued that payday loan companies are being irresponsible in offering loans without investigating the credit history of each applicant. However, the very nature of payday loans means that applicants are unable to borrow more than they can afford to repay.

Payday loans are small value, short-term loans that are issued as an advance on the applicant’s wages. Payday loans, as their name suggests, are simply a sub until payday. Although the applicant’s credit history will not be questoned, they will have to prove that they are in permanent employment and provide copies of their most recent pay slips in order to qualify for a loan. The value of the loan cannot exceed the value of the applicant’s next pay check and lenders are unlikely to approve applications for amounts that the applicant could not comfortably afford to repay.

The value of most payday loans is between £100 and £1000 and the repayment date is determined by the date on which the borrower’s salary is next due to be paid. Therefore the maximum duration of a payday loan is 31 days.

For many people payday loans offer a life-line in times of financial crisis. They provide instant cash that is often unavailable from other credit sources and enable borrowers to sort out their immediate problems whilst buying them a little time to reassess their finances and determine a plan for the future. In the current economic climate it is hardly surprising that the loan products offered by payday loan companies are proving so popular in the UK.

Most UK payday loan companies now offer online application facilities which enable potential borrowers to complete their application in total privacy. Previously the only alternative to banks and credit card companies were pawn brokers and cash converters and the stigma associated with such establishments discouraged some people from using their services for fear of being seen by firends or family. Of course, payday loans can eradicate cash demands in the short term only and consequently should be used sporadically.