Well, just that in fact, a payday loan is a short term loan repayable in full on your next payday.

They are not intended for long term finance and are usually applied for by people who for whatever reason cannot get loans from other sources such as high street banks and loan companies.

These can often be self-employed, persons with bad credit history or little track record of credit.

The global recession has made credit much harder to obtain and transferred a whole new group of the people into what is called ‘the sub-prime market’, i.e. those considered a potential credit risk.

People who only a year or so ago would probably have had no problems in applying for a bank loan are now finding themselves turned down and only people with triple A credit files are being accepted for cheap finance.

So what do you do if the car breaks down mid-month or the central heating boiler blows up in the middle of January and your bank won’t extend your overdraft?

Well a Payday loan may be the only option open to you.

The payday loan companies ‘lower the bar’ in terms of their criteria for acceptance and in return they charge a much higher rate of interest.

Typically as long as you have a bank account with some form of payment facility, cheque book or payment card the payday loan companies will consider you for an advance of up to 750 repayable in full on your next payday.

Sometimes these payday loans can be extended for a further period by paying one month’s interest, but this can make them very expensive sources of finance and it is better to pay them off in full if you can.

Are these types of loan very expensive? Yes they are, if you compare to a bank or credit card loan rate but they are not intended to be used for long term finance and have to be viewed differently. Often having a lack of funds may cause your regular monthly payments to fail so charges are applied by your bank and also from the payee and these together can add up to much more than the payday loan interest.

If you are considering applying for a loan till your next payday then you need to be certain that you will be able to pay back not just the loan itself but also the interest on it as well from your next salary payment without causing yourself financial hardship the following month.

Consider if there is any other way of meeting your needs, a loan from a friend or family member maybe.

If you do decide to go ahead with your payday loan most of the payday loan companies will have the loan in to your bank account within a few hours of being approved.