Payday loans are short term loans that are availed to meet emergencies and are not long term loans. They carry higher interest rates and should be used only in an emergency. Further, they need to be repaid as soon as one can.

As the name suggests, such loans are provided to help borrowers manage their expense until the next pay date. This loan is best suited for those people who are running a tight budget, or for those who may need some extra cash to tide over a sudden emergency. In most cases, the borrower will be required to provide a cheque for the loan amount plus a fee, in advance.

Usually, the tenure for cash advance loans extends to the next pay date. In some cases, lenders may relax the rules and allow some extra days for the borrower. Such loans do not require people to furnish their credit history. Lenders also do not require collateral for providing the loan. As a result, loan approval is fast and the money will be available mostly with 24 hours. Since the tenure is short, borrowers can borrow only up to about GBP1, 000 as a cash advance loan.

Even though the advantage of a cash advance loans is their fast dispersal, it is very important that borrowers repay the amount on the specified date without fail. This will ensure that borrowers will be able to get speedier loans the next time they opt for a similar loan. The downside of such loans is that they carry heavy penalties and therefore, late payments will be associated with heavy fines. The interest charged for such loans are very high. Similarly, if the borrower wishes to extend the loan, it will attract higher interest as well. Since cheques are involved in the transaction, default charges, if any, will add up to the total cost of the loan.

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