The UK charity, Shelter, has recently carried out a survey that indicated nearly 8 million British homeowners or tenants are having difficulty with their monthly mortgage or rent payments, which is a sharp rise on the previous year. The survey also showed that up to one million of these consumers have had to rely on short term payday loans to keep the roof over their heads.

There are two ways of looking at this phenomenon:

• write articles to scare people and the authorities about the increase of the use of short term payday loans, or
• write a sensible one showing the benefits of short term loans from the specialist lenders in the high risk loans sector.

There will obviously be a few amongst these borrowers that will have difficulty repaying the short term payday loan, the same as there are for mainstream loans.

What is a Short Term Loan?

These are unsecured loans that are provided by specialist payday lenders, usually for between 3 and 30 days for relatively small amounts of £100 to £1000 at higher interest rates (APRs) than the mainstream lenders.

Many types of consumers use short term payday loans to cope with financial emergencies, short term cash flow problems to meet their higher than expected bills or even to pay their mortgage or rent. These types of loans used to be targeted at low income people with a poor credit record, mainly by high street and door step lenders. The internet and the adverse publicity about the mainstream banks have created a whole new market for short term payday loans in the UK.

There are now many small and medium sized companies that provide for the fast growing short term payday loan market. There are the big direct specialist lenders, e.g., and many brokers like that provide borrowers with the online platform to access short term payday loans.

Unsecured Loans

The mainstream lenders provide unsecured loans for periods of 12 to 60 months for much higher amounts (£1,000 to £25,000) at lower interest rates (APRs) to consumers with healthy credit records. These are normally applied for and processed at a branch and can take a lot longer than the much faster online application process for a short term payday loans. The ease of access and speed of receiving the money in their bank accounts is one of the main reasons that the use of these loans has increased in the UK. Some payday lenders also provide installment loans, which can run between 3 and 12 months at higher rates than the mainstream loans.

How to Compare Payday Loans?

The internet is great for searching for payday lenders. But, many sites search the market for the best rates and providers, so, all the applicant has to do is submit the online form and await the response by email.

Most applications are processed within 24 hours and some as fast as 15 minutes. Once approved, the funds can be in the borrower’s bank account immediately!


Author Bio:

This guest post is written by Andy Horton of I have a background in IT as a business analyst and project manager primarily in financial organizations. I am interested in personal finance and the effects of payday loans on individuals and families.