It’s a term you might have heard – a pay day loan refers to a short-term, unsecured loan of generally a small amount – these aren’t something you could buy a home with. The name comes from the idea that you might have a sudden and immediate expense come up – think a broken-down car, or a medical expense – a few days before your place of employment pays your salary, and you need something to cover the gap.
Also known as cash advances, they’re a little bit of extra money you can draw on immediately in situations where payment is due immediately. They help you avoid potential overdraft fees on your bank account, bounced checks or excessive credit card fees that you might otherwise attract. You’ll be able to protect your credit rating and your ability to borrow in the future by making smart choices around payday loans.
The help you need, when and how you need it
While ensuring you have the money to take care of a popped tyre, broken hot water heater, or sudden broken leg is what they’re primarily associated with, pay day loans can be so much more than that. Depending on the term of the loan, they’re useful for everything from a little bit of extra spending money on a weekend to getting you that ticket to a holiday.
For business-owners they can also help you grab some much-needed supplies or equipment ahead of a big order. If you’ve depleted your stock of some mission-critical material but know that you’re in for a big pay day if you can just fulfil this order, a payday loan might be the perfect option for you. Equally, they can allow you to capitalise on an opportunity as it arises where your capital and other lines of credit are depleted. For example, say you want to grab a small piece of plant or machinery, or repair a piece of equipment in your shop – you can either wait for your next invoice to be paid, which could result in your business suffering a downtime of days, or you can take out a short-term pay day loan to get yourself back up and running.
Offering you flexibility
A payday loan can help you get out of trouble or into a good time when you know you’ve got money on the way. Be responsible with your money and speak to a loan consultant to find out if these loans are right for you.