When A Payday Loan Isn't Actually A Payday Loan

Payday loans... they are ever more popular, there are ever more lenders and of course, there are ever changing interest rates - But, some people commonly get confused between what a payday loan is and what the alternatives are & subsequently how they function. So, let's start to clear things up a little bit - A payday loan is a payday loan when you are required to pay it back on your next or subsequent payday. Otherwise it's a personal loan.

If you have found a lender or a broker who is offering you a loan and the agreement doesn't stipulate that you are required to pay it back at your next payday, then it's in all likelyhood not a payday loan, but more likely to be a standard unsecured loan or a guarantor loan.

If you are seeking to take out a loan over a period of 12 months or more, then try to make sure you're not paying an interest rate which is in very high figures, such as the dreaded three digit APR rates (or even worse!) as there are alternatives in the market that will offer you much, much lower rates and will equally guarantee that you can get the money you are looking for, an example of this is guarantor loans.

Unsecured loans and guarantor loans are available typically available over a minimum loan term of 6 months. If your loan is spread over this period of time, then you should probably expect to pay interest rates which are much lower than what would normally be advertised for a payday loan - if not, then something is likely to be wrong.

Guarantor Loans are normally available on loan terms of up to 5 years and have interest rates in the low to mid tens of percentage. They allow their applicant's with poor credit ratings to borrow cash sums of up to five thousand pounds by stipulating that a loan guarantor is required to sign the credit agreements at the same time as the applicant - this usually means that the guarantor will have to pay back the loan should the applicant not be able to meet their repayments.

If you are looking to apply for one of these guarantor loan products and you are aware of or know someone who would be willing to help or assist you and act as a signed guarantor, then normally it's a pretty easy and smooth process. The guarantor has to conform to some additional checks and criteria for the security of the lender, but as long as they meet these then the standing and credit history of the applicant isn't usually a problem.