Payday loan locations and legislation UK

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It is an experience most people can relate to: running on a tight budget when an unexpected emergency arises, but payday is another two weeks away. In a situation like the one mentioned above, one can ask for a pay advance from the employer and run the risk of looking unprofessional. There is another alternative that may be suitable for such a financial predicament– payday loans.

Known also as payday advances or cash advances, payday loans are short-term unsecured loans that are suitable for borrowers who need a small sum of money quickly without the red tape of traditional financial institutions. It is usually for loans under £1000; and generally speaking, most lenders can offer better lending options the smaller the loan.

Obtaining such a loan hinges on the consumer’s previous payroll or employment records. Some companies will run credit checks, while others may bypass it altogether; but in general, payday lenders tend to be more lenient than the larger financial institutions. So in a nutshell, this is not a personal loan that will help a consumer make large-scale purchases or investments like a mortgage or a car loan; but it will get a borrower out of a financial jam in the short-term.


In the interest of protecting consumers, different legislation’s have been put in place to prevent usury or unreasonable or excessive interest rates and terms. However, this ordinance tend to vary greatly between different countries; and in the case of the United States, regulation differs some state to state.

While some jurisdictions may outlaw payday loans entirely, others may have very few restrictions. In general, laws pertaining to payday advances may impose a limit on the annual percentage rate (APR) or the effective annual percentage rate (EAPR) that lenders can charge.
However, there is much debate as to the usefulness of these limitations, as both APR and EAPR can only compare the cost of long-term credit, while the EAPR also take compound interest into account. Considering that payday advances are short-term loans, and also do not allow compound interest, both APR and EAPR calculations actually have no real meaning in this application.

Ultimately, these kind of short-term unsecured loans carry a more significant risk for the lender than the consumer. The reported default rate for most payday lenders is apparently around 10% to 20%, and can cost up to a quarter of their annual revenue.


The usual process involve the consumer visiting the lending store and securing the loan from the payday lender. This loan is expected to be repaid at the borrower’s next payday. To obtain a loan, the borrower may be expected to provide some verification of income, such as pay stubs and/or bank statements. On the whole, different companies and franchises will have their own underwriting criteria that the customer must meet.

Once the sum of money is negotiated and extended, a postdated check will be made out to the lender in the amount owed plus any fees or interest incurred. When repayment is due, the customer will return and repay the loan. In the event that the borrower does not return, the lender is entitled to redeem the check. If there was not enough money in the account to honor the check, the borrower may be required to pay a bounced check fee to the bank as well as the costs of loan and any other additional fees and/or increased interest rate as a result of the failure to pay.

Another option available now is online payday loans. The borrower may simply fill in a loan application online, or via fax if documentation is required; and the sum of money is transferred by direct deposit into the customer’s account. On maturity date, the money and finance charges will be withdrawn electronically from the same bank account.

Every now and again, most people will find themselves in a situation where a little more cash flow will allow for a bit of breathing room. On such occasions, it is good to know that payday loans is an option that is both easy and convenient.


Warning: Late repayment can cause you serious money problems. For help, go to