Payday Loans and Postdated Cheques

Payday Loans

Payday loans are loans for homeowners and tenants in the UK who are employed and who are over 18. They can also be known as cash advance loans, postdated cheques loans, delayed deposit cheques, or deferred deposit cheques. Payday loans are very expensive way of borrowing and are surrounded in controversy because of their cost. Many people condemn pay day loan companies because of the high interest rates they charge but have any of them had the worry and embarrassment of having a cheque bounce? Have they had to decide between buying food or buying petrol for their car because they knew they couldn't afford both.

Payday loans are expensive and can cause people a lot of financial trouble but some people don't have the choice and are turning to a payday loan as a last resort.

How Payday Loans Work

Payday loans can be arranged fast (often the same day or within 24 hours of the request) for homeowners and tenants who are over 18 and have a bank account and a job or regular benefits. Many pay day loans companies are automated services online, you do not need a fax machine and you can receive a reply within a few minutes. Some pay day loan companies also offer flexible repayment options and money to people with bad credit. You have to repay the loan plus any charges on the day you are paid. These loans are not long term loans and you will notice the difference in your pay cheque when it is paid. A smaller paycheque one month could result in even more financial difficulties the following month. If you are in danger of falling into this financial nightmare you should seek alternative help and advice.

Postdated Cheques

Many people who suffer financial problems use cheques to delay a payment being debited from their account. Some payday loans companies will ask you to write a postdated cheque (although many now use electronic payment agreemtents) as security to pay for the money they have lent you.

Postdated cheques are not illegal but many banks and building societies now have clauses in their terms and conditions stating that if a post-dated cheque is presented for payment, it will be treated as if dated on the date of presentation. These banks and building societies will therefore ignore the date on a cheque that is presented. You must therefore make sure that anyone or any company you give a postdated cheque to will not present the cheque before the date you have written on it.