Quick loans: all you need to know

Getting cash quickly is not always easy and the challenge of trying to find money if you need it right now can make a difficult situation much worse. The good news is that you don't need to look very far to get that cash right away.

A quick loan, also called a payday loan, could be just what you need. A quick loan is a good way to solve an emergency cash problem or to help in affording that special treat when you would otherwise be forced to walk away. Payday loans work on the principle that you borrow an amount of money, usually between £50 and £1,500, for a set period of time which is typically less than 28 days or until your next payday. A quick loan is effectively an advance on your salary and the maximum loan amount is determined by a number of factors including your salary.

A quick loan is very easy to apply for and some lenders deposit the funds into your account on the same day*. Completing an online application form is probably the fastest route to getting your quick loan because lenders will automatically check your application and if approved, usually you won't need to visit an office or send away any documents. In most cases the website will ask you for your name, address, bank details as well as information about your employment and the salary you are paid.

Quick loans can appear to be very expensive. If you compare the APR on a quick loan to the APR on a traditional form of loan you will probably be surprised to see that the fees associated with quick loans may convert to an APR of over 1000% whilst a credit card would appear to charge a fraction of the interest.

You need to remember that any interest rate charged on a quick loan is charged for only a few days. A high APR paid on £500 over 5 years is a lot of money, but if you borrow £500 for just a few days, the interest payment is not large when considered as a cash amount. Bear in mind that lenders that supply payday loans take on a fair degree of risk when they grant a loan because they have limited information about you. Payday lenders need to compensate for this by charging a reasonable arrangement fee.

As with any loan you need to be realistic with regard to your ability to pay back the loan and the reason you are taking out the loan. Even though payday loan providers will do their best not to lend you any more money than you can comfortably afford to repay, only you truly know what your financial commitments are. Payday loans are intended to be used for very short periods and are not a long term solution to financial difficulty.

When you think about the convenience of a quick loan you will realise that it can represent good value for money. The fee associated with the loan really should be more than offset by the convenience factor and perhaps the costs of not having the money when you need it. In that sense, quick cash loans are really great value for money.