How Do Payday Loans Work?

You will have heard the term ‘payday loan’ many times but what exactly does it mean, and how is it different from a regular bank loan?

Read on for an in-depth look at the payday loan system to learn how it works and what is involved.

Short-Term Lending

A payday loan, also known as a payday advance or a cash advance loan is a small, short term loan. This means that the money will be leant for a short, fixed amount of time, usually just a few weeks or months. The interest rate and any fees are fixed at the start so you know exactly how much each instalment will be, and when the loan will be fully repaid.

No Collateral

Payday loans are unsecured, meaning you don’t have to involve any assets in the terms of your agreement. Your loan is approved on the basis of your income records so there is no risk to your property or possessions if a change in your circumstances means you can’t make an instalment. Instead, the loan is granted on the premise that you will be able to repay it through your regular earnings.

Fast Processing

Because these loans are unsecured the process of approval can be very fast. You will just need to provide a few documents to prove your identity and income before the loan can be approved in just one day. Once the application is accepted, your money can be with you in minutes.

Sensible Finance

Using a short term payday loan to cover an unexpected expense can be cheaper than facing late credit card payment fees, or risking bank fees for a bounced cheque.

Payday lending in New Zealand is regulated by the Commerce Commission to make sure that it is safe for borrowers. We will only lend you money if we know you can make the repayments, so if your loan is approved, you know you are safe.


A loan arrangement with your bank is often worked out on the basis of a specific need, such as car financing or a business loan. With a payday loan there is complete flexibility over what you spend your money on, and it could even be used for multiple purposes.

These loans also offer flexibility in how you pay them back with the options of a direct debit or cash deposit, depending on what method is best for you at the time.

Straightforward Borrowing

Short term loans such as ours are easy to understand and simple to set up. There aren’t multiple long pages of forms to fill in, there’s no asset assessment to complete and you have the choice of applying in person, over the phone or online. The total interest you will pay and any fees involved are made clear so there is no confusion over your financial commitment.

If you think a payday loan could be helpful to you then call Chequers Finance now on 09 299 7883 or visit our website for more ways to get in contact.

You will have heard the term ‘payday loan’ many times but what exactly does it mean, and how is it different from a regular bank loan?

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Chequers Finance Hamilton

Caro House
137 Alexandra Street
Phone: 07 838 2939

Chequers Finance Henderson

334 Great North Road
Phone: 09 836 6201

Chequers Finance Papakura

155 Great South Road
Phone: 09 299 7883

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13 Criterion Street
Ph: (09) 276 4384