To be able to apply for a payday loan applicants must be employed either on a full or part-time basis since a payday loans are actually a form of cash advance on a person’s salary. This means that the loan company will lend an employed person a relatively small amount of cash, between £100 and £1000, on the condition that it is repaid in full, plus interest, on the very same day as the borrower receives their next salary payment.

The primary criteria against which payday loan companies assess this type of loan application is therefore a person’s employment status and level of income. This in turn means that the applicant’s credit history is deemed to be irrelevant and negates the usual requirement for a credit check. By eliminating the almost universal credit criteria of a credit check, UK payday loan companies are able to offer short-term loans to applicants who by virtue of their poor credit history are barred from accessing other forms of credit such as credit cards and long-term loans.

In order to qualify for a payday loan or cash advance loan it is necessary for applicants to provide proof of both their employment status and income. This is not as onerous as it may sound as it simply involves the applicant submitting copies of their three latest payslips together with the completed application form. In fact the entire application process is extremely quick and easy to complete whether applicants choose to apply online or in person at a high-street lending store.

Standard Payday Loans Approval Criteria:
– Employment status evidenced by 3 copies of the applicants most recent payslips
– Proof of home address evidenced by a bill from a utility company or copy of the applicant’s most recent bank statement
– Submission of personal bank account details
– The value of the loan applied for must not exceed the value of the applicant’s next salary payment

Dependant upon the applicant satisfying the above criteria, applications for payday loans are usually processed within minutes and if approved, applicants can have their cash within the hour if necessary.

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This week has seen payday loans come under criticism from debt advice groups who claim that some companies are charging excessively high interest rates on this type of loan. The debt advice groups are calling for a cap on interest rates for payday loans however, the Office of Fair Trading (OFT) responded to this by stating that payday loans would be covered by investigations of the issue of responsible lending and that although the loans, often used by people to tide themselves over until they get their wages, generally attract high rates of interest, the businesses offering them are properly licensed, professional and responsible.

UK payday loan providers also responded to the criticism by explaining that higher interest rates are levied on payday loans to reflect the level of risk being taken by the lending companies.

As one would expect, the payday loan companies claim they are providing a valuable service to customers who may be unable to get credit elsewhere. However, this claim is supported by the rapid rise in popularity of the products offered by the payday loan companies as they provide a real alternative to unauthorised overdraft charges, pawnbrokers and loans from friends or family.

Payday loans do not involve a credit check and for this reason they are sometimes referred to as bad credit loans. No credit check means that these cash advance type loans are therefore available to those who are unable to get other forms of credit such as credit cards, traditional long-term loans or overdraft facilities. The loan companies do however require proof that the applicant is currently employed and that their next pay cheque will be more than sufficient to repay the loan in full.

Many payday loan customers report that by getting a payday loan they are able to resolve their immediate cash-flow crisis and buy themselves a little bit of breathing space in which to assess their finances and to get advice on how to manage their money better.

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It can be almost impossible for those with a bad credit history to get loans or credit cards. Frustratingly this can be as also true for those who have actually cleared that debts as for those who still owe money. This is because credit card companies and loan providers carry out credit checks each time someone applies for credit. The purpose of these checks is to examine our credit history which details any credit we have ever had from credit cards, loans to mortgages. Not only can companies find out exactly how much debt we currently have, they can also determine whether we have ever defaulted on our loan, credit card or mortgage repayments. Thus, even when someone has cleared their debts, they may still have a poor credit rating if they have previously defaulted on their repayments.

When it comes to applying for a payday loan, a bad credit history will not be a barrier to approval. This is because payday loan companies do not carry out credit checks on those applying for a cash advance on their salary. Payday loans are extremely short-term loans and the loan companies will demand repayment of the total loan amount on the very same day as the borrower next gets paid. The brevity of the loan term together with the fact that it is simply an advance on the borrower’s salary makes a person’s credit history irrelevant. The primary qualifying factor is the value of the applicant’s pay cheque and the date on which it will be paid.

Provided that an individual can submit of proof of their id and address together with copies of their most recent payslips and bank account details, they are eligible to apply for a payday loan, irrespective of their credit history.

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