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Everything you need to know about payday loans

A payday loan is an unsecured loan provided on a short-term basis to cover expenses until your next paycheck from work comes in. They are a way for people to borrow money against their future paycheck to cover expenses in the here and now.

Payday loans are named as such because they act as an advance payment based on the borrower's future income (which they will receive on their next 'payday'). The payday loan borrower will give authority to the payday lender for future deposit or give them electronic access to the bank account their employer pays wages to.

Payday lenders will provide borrowers with a loan with the agreement that they can recover the money plus fees when said income arrives. The relationship between payday borrowers and the lender typically does not last a long time, concluding once the borrower's wage comes in.

    Tips to reach your financial goals

    Financial goals are any goals related to your personal finance. They come in all shapes and sizes, and they will grow and mature with you throughout your life.

    As a child, your financial goals might have been to save for a new bicycle or music player. Once you become an adult, your financial goals become much bigger in scope.

    Examples of financial goals include:

    • Building your retirement savings
    • Raising capital to start a business
    • Saving money for a holiday

    What are the 4 main types of personal loans?

    Personal loans are a reliable way for you to borrow money to cover expenses in the short-term with an agreement to pay back the sum with interest. They can be used for practically any purpose such as helping you to buy a car, finance a holiday, or pay urgent bills.

    While most lenders will ask you to tell them the purpose of the loan, your answer is usually not a factor in whether you are approved. Approval for a personal loan of any kind depends on if you meet the lender’s eligibility criteria.

    A lender’s eligibility criteria will assess your level of risk (your ability to repay the loan) and usually demands that you have a regular source of income as a minimum. The rules and regulations surrounding short-term finance are there to ensure you do not borrow money when you cannot comfortably make your repayments.