What is the difference between a Payday Loan and a Short Term Loan?

Payday Loans

Payday loans are paid directly into your bank account, usually on the same day. The interest rate is much higher than other types of loan. A payday loan must be repaid as one lump sum payment, usually within 30 days. They are designed to cover a temporary shortfall or financial emergency until your next pay day.

Short term Loans

Short term loans are paid back over a longer period (up to a year) and are paid back in smaller, more manageable installments.

Why take out a Payday Loan?

Payday loans provide easy access to credit, even if you have a bad credit record. If you have a poor credit history, payday loans can be one of the few ways you can access credit. High Street Banks are unlikely to lend to borrowers with low credit ratings, but payday loan companies will often take the risk because of the smaller amounts involved and the fast payback time.

WARNING. Payday loans are often taken out by people who cannot afford them or who may already have other debts. There may not be enough income to repay the new loan and you could get caught in a rising spiral of debt.

Am I eligible for a Payday Loan?

Looking for a loan under £25000?

To be eligible for a Payday Loan, you need to be a minimum of 18 years of age, be a UK resident, have a valid UK bank account, are employed and receive a regular pay cheque

At 1st Loan, we introduce to brokers who specialise in Payday loans for people who have an urgent financial requirement, such as a car repair or an unexpected bill that they need to pay now and can comfortably repay when they get their next salary paid The terms of any loan offered will depend on your circumstances. You can apply for a payday loan up to a maximum of £1,000. You can apply for a loan today even if you have a bad credit record. Loans are available only to UK residents over age 18, in employment with salary paid into their bank account.

Who should consider a short term loan?

Taking on a short term loan is something that needs to be fully thought through. It should only be considered in an emergency situation. Short term loans should only be used for temporary money problems; they are not meant to be used as a long term solution. However, if you believe that a short term loan is right for you and you are confident that you can make the repayments on time, please complete the short application form.

How much will a payday loan or short term loan cost me?

You need to complete the short application form to find out how much a loan will cost you.

Please make sure a payday loan or short term loan is right for you before taking it out. You should always think very carefully before committing to any form of credit or borrowing money.

Please remember that Payday loans should only be used for very short term financial needs. Short term loans are not suitable for long term borrowing

Financial Difficulties

If you're trying to manage existing debt or in financial difficulty, consider what your options are before you borrow. For further help on managing your money visit the Money Advice Service.

Links

Further information on Payday loans: Wikipedia information on Budgeting Loans
Credit Reference Agencies Experian Equifax