Payday advance loans are probably the smallest type of unsecured loan out there. You can get between $100 and $1,000 from your typical online lender that will need to be repaid within about a 30 day period. This makes it the smallest type of unsecured loan not only in value, but in duration too.

A payday loan exists to fill a gap in the lending system. Most places, whether it is a bank or a finance company, will require a certain level of credit-worthiness for customers to take out a loan and will only lend substantial amounts of money over a long period of time. It is when that emergency strikes, that these people will go for a payday loan to borrow just a couple hundreds of dollars for a few days or weeks, until their next payday comes.

In New Zealand, registered lenders are quite regulated in order to secure safety for borrowers. They are bound by the Credit Contracts and Consumer Finance Act as well as the Privacy Act; they are also required to be a member of the FDR, or Financial Disputes Resolution scheme. On top of what is imposed on them by the Government, reputable companies will have their own Responsible Lender policy which will set down parameters for who can and can’t borrow money from them. It will normally include things like not lending to anyone without a job that pays a certain weekly amount, and not lending to those on benefits or those who are bankrupt.

The advantage to this type of unsecured loan over a credit card or a larger personal loan is they are quick and easy. If you need money quickly, then a credit card or personal loan may take too long, if you can get one at all. A payday loan is normally in your account the same or following day as an application is made, and repaid within a few days or weeks.

Payday loans are an unsecured loan that is there to fill a certain gap. It isn’t going to fit everyone, but for some people it may well just be the perfect fit.