A payday loan is a small loan taken by a person for a short-tenure like for few days, weeks, or months, if he requires some immediate help with his finances. These loans can be borrowed instantly, though they are issued with higher interest rates and are unsecured. This makes them popular among persons with the history of bad credit. These are also commonly called as a small dollar loan, instant loan, salary loan, short term loan or advance cash loan. Some kind of employment or income verification is always involved in the process of dispensing these loans.
Payday loans in different countries
Payday loans are country specific. The laws concerned with these loans differ extensively between several countries and in central systems, changes between different states. Also, the annual interest rates and the amount of credit vary according to the country, like maximum rate of 14.299% in Canada to 48% in Australia. In United Kingdom, this loan industry has flourished rapidly, with about four times increase in the number of people taking the loan from 2006 to 2009. Payday loans UK are loans up to £500 that has to be repaid after a short term. Though the loan borrowing companies are not restricted to follow a fixed annual interest rate but still the law demands them to mention their yearly percentage rate. The most of the loan borrowers in UK have their annual incomes below £25,000. Several authorised companies in UK also offer the direct loan to the borrowers with cheap interest rates, the reason behind the surge in this trend.
Advantages and Disadvantages of Payday loans
These loans offer many advantages to its borrower like these are very convenient and easy to obtain. These are quick and provide an extra loan source. Disadvantages are mainly that they are more expensive and often scam lenders destroy the image of this industry.