Category: money

Making use of short period loans

If you borrow money, you may hear mention of long and short period loans.

This expression just relates to the length of time the loan is repaid over. This is also sometimes called the term of the loan.

A long period loan is typically one that is paid back over years – a mortgage or major house renovation loan may be good examples.

Short period loans are typically taken out for smaller amounts of money and repaid back over a period of a year or two – perhaps sometimes over just a few months. Possibly a furniture loan would be one such example.

Payday loans

For a long time, most borrowing fell into one or other of these categories – possibly supplemented by the bank overdraft for more variable requirements. Unfortunately, these loan products didn’t necessarily suit the needs of people who wanted a smaller loan just until they next got paid. That’s why the payday loan was developed.

The payday loan is a facility designed to offer you a fast loan paid directly into your bank account – a sort of cash advance on your next payday. When you next get paid, the lender simply debits your bank account to recover the loan plus their previously agreed charges.

Your debt is paid off and you don’t have to worry about ongoing repayments.

As the providers of the payday loan are typically not advancing very large sums for extended periods of time, they are able to make very fast decisions and usually entirely online. If the loan decision is positive, the money could be making its way towards your bank account within a few hours.

Poor credit history?

You may also benefit if you have some question marks on your credit history because the requirements of the payday loan providers may be less demanding than those of the conventional lenders.

As is the case with all lending, the costs of borrowing through a payday loan will vary depending upon the provider. The good news is that typically these loans are reasonably priced and may actually be more cost effective than some unauthorised bank overdrafts.


For example and at the time of writing, if you wanted to borrow £125 until your next payday in two weeks’ time, using a payday loan from Speed-e-loans it would cost you £18.19 in interest plus a £4.95 bank transfer fee. (Do note that payday loans from other companies will attract different charges and the figures above should be used purely for illustration purposes of how a payday loan may be cost-effective, say when compared to an unauthorised bank overdraft).

The attraction of a payday advance is that it offers very short period loans that minimise your engagement in lengthy repayment periods. It’s borrowed and repaid very quickly. Once that’s done you can forget all about it – until you next need access to fast cash.