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What is a Payday Loan?
It is a short-term loan that borrowers can use to hold them over until the next payday. These smaller loans must typically be paid back in full, plus interest, by the borrower’s next payday. Loan amounts vary, but through our site, users can request anywhere from £50 to £5,000. Borrowers are also sometimes connected with an installment loan product. On average, short-term loans are taken out for an average of thirty days.
Payday loans can be viable resources for emergency cash needs. Common expenses that consumers can use payday loans for include medical charges such as co-pays or prescription drug costs, auto or home repairs, and child-related charges. Payday advance loans can also be used for more personal or time-sensitive monetary needs such as utility bill payments that can generate late fees or penalties, returned check fees and cancellation fees, or for financing big-ticket items such as appliances or vehicles.
- Our service is 100% free to use
- We help you find emergency funds
- Our process is designed to be easy
- All credit history types are welcome to complete our loan inquiry form
- We protect your data with industry-leading encryption
- Most of our lenders will provide you with a response within minutes
How do Payday Loans Work?
Request a loan
Those interested can apply for a payday loan online. The application process is typically streamlined for borrower convenience, and consumers can apply directly online. While requirements may vary from lender to lender, the following information is typically required:
- Valid identification and proof of age and UK residency
- Proof of employment
- Bank account information
- Proof of monthly or yearly earnings
If your loan application is successful, the lender may deposit your funds within a few business days.
How much cash do you need?
While there are caps on interest rate costs and fees that lenders can charge, borrowers can take out £200 payday loan, £500 payday loan, and even £2000 payday loans, depending on the lender.
Repay your loan
Borrowers typically have to repay their loans by the time of their next paycheck. Some lenders may allow long-term payday loans and longer borrowing periods that make one-month payday loans, three-month payday loans, or even six-month payday loans possible. However, these loan products may be referred to by a different name.
Loan repayment can be made by automatic withdrawal or by writing a check, in some cases. Borrowers who provide their lenders with their banking information may allow their lenders to automatically withdraw the full loan amount at the time of repayment. Borrowers can talk with their lender about available payment options.
Failure to repay a loan or to meet loan terms can result in incurring more fees and higher interest rate charges. Poor loan management may also negatively impact a borrower’s credit score.
Similarly, borrowers who meet loan terms and make payments on time may see positive effects on credit scores. Borrowers can check credit scores periodically, through companies like Experian, Equifax, or TransUnion.
In some cases, lenders may be able to extend or refinance loans. This can lead to steeper interest costs, however. Borrowers should note that terms differ from lender to lender and should carefully consider their specific loan agreement and conditions.
Quidable.co.uk is the Right Place to Start
We have a simple and streamlined request process
We know how important it is for you to get your cash and start towards financial relief. This is why we have made our request process hassle-free and streamlined for your convenience, whether you are requesting a £50, £500, or a £1000 payday loan. The request process can take as little as a few minutes and is completely free.
You can trust our process and our results
Quidable.co.uk operates as a broker. This means that we connect you to a large network of trusted and licensed lenders. After you fill out our quick payday loan request form, we will try to match you with a reputable lender. Our team of trusted experts can advise you on the appropriate option for your specific financial needs.
Your data and information will remain safe through our secure technology
What to Keep in Mind
Short-term loan laws are regulated by the Financial Conduct Authority or the FCA. According to the FCA, interest rates must be capped at 0.8% per day of the amount borrowed. This means that all interest and loan fees must not be greater than the capped percentage. In addition to this, to protect UK borrowers who may be struggling to pay, default charges must not exceed £15. Under this law, both interest on unpaid balances, and default charges, must not be more than the initial rate.
Potential borrowers should also note that there is a total cost cap of 100%, which protects borrowers from incurring increasing debts. This means that borrowers are not required to pay back more in fees and interest than the original amount borrowed.
The FCA also notes that a customer borrowing a loan for 30 days and who meets their loan terms, will not have to pay more than £24 in fees or charges for every £100 that is borrowed.
Further, there are no such things as “no credit check payday loans” and lenders will, in fact, check an applicant’s credit rating. That said, bad credit payday loans are still possible in many situations.
As per the FCA’s rules, lenders are responsible for ensuring the creditworthiness of their consumers. The most commonly used methods to assess an applicant’s financial situation and affordability are credit rating agencies such as Experian or Equifax.
To this end, there are no guaranteed payday loans for bad credit. Similar to conventional or traditional loans, most lenders will consider a borrowers’ income, credit score, and history, as well as their debt-to-income ratio.
In some cases, however, lenders may offer payday loans to consumers who have poor credit scores or poor credit histories if borrowers add a guarantor to the loan agreement. Applicants should note that this is always left to the discretion of the lender in question and that terms must be agreed upon by both the lending and the borrowing party.
Consumers can read more about the rules and regulations associated with short-term lending on the FCA’s website.
Payday loans can often carry high fees and APRs. An APR is the annual interest rate of the loan being taken out, which includes the interest charged on the original loan amount, as well as all fees charged by the lender. Many factors go into determining the APR and most loan providers often use an applicant’s credit score to determine the rate, which may be higher if the loan term is shorter. Rates may vary from lender to lender.
Studies have shown that APR costs for payday loans are typically more expensive than those associated with longer-term loans or more conventional credits. The average annual percentage interest rate of charge for short-term loans can be up to 1,500% in some cases, compared to the 22.8% average for a standard credit card.
And while the costs of borrowing are lower and more regulated due to the rate cap, the FCA reports that of the more than 5.4 million loans that were taken out in the year 2018, borrowers had to repay 1.65 times more than the original amount they borrowed, on average.
Rates & Fees
Quidable.co.uk is not a lending agency. We provide a free service that helps consumers request a loan and if you find a loan, your lender will show the fees associated with your funding through your loan agreement. You are under no obligation to accept a loan from any of our providers and you can decline at any time up until you sign the loan agreement.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk.
As Quidable.co.uk is not a lender, we do not set APR or loan terms. The lenders we work with have 7-day to 84-month loan terms with 18.7% to 1,576% APR. To understand the financial implications of repaying a loan with interest, please consider this representative example: If you were to borrow £1,200 for 18 months with 49.9% APR, your monthly payment would be £90.46. The total amount repayable would be £1,628.28, which includes £428.28 in interest.
Although payday loans are viable financial resources for those who are temporarily short on cash, experts warn borrowers to be cautious of predatory lending practices that may trap borrowers in a cycle of debt.
Borrowers should be wary of third-party debt-collection agencies. All agencies must be authorized and comply with the FCA. There are a number of schemes that corrupt lenders or agencies may use to scare, abuse, or threaten borrowers. To avoid being a victim of a lending scam, consumers should keep an eye out for suspicious or irregular activities and behaviors.
These may include:
- Calls or emails from parties that request personal or financial information.
- Pre-approval loan notifications prior to a loan application or inquiry.
- Lenders or agencies that require deposits, processing fees, or any other form of monetary securities or collateral.
- The threat of jail time for debts.
If offering payday loans, direct lenders are required to indicate so, in addition to providing borrowers with full loan terms and conditions.
Borrowers should make sure they are working with legitimate lenders that are authorized by the FCA and have the appropriate licenses necessary.
- Request for proof of license from lenders before applying for a loan
- Protect personal and private information such as emails, addresses, proof of identification, banking information, and the like
- Only call and respond to lenders via the phone number or information provided on a recent statement or on the loan site directly
- Request a written verification if asked to repay a debt owed
- Report any unwanted or unsolicited contact from debt collectors to the authorities.
- Keep track of financial correspondence with the lender in question, in order to maintain a record of all transactions made
- Periodically change the passwords across your computer, laptop, smartphone, or tablet and try to avoid using the same passwords whenever possible
- Remain up to date and read up on the most recent rules and regulations regarding payday lending in the UK
Alternatives to Payday Loans
Seventy-five percent of UK consumers take out more than one loan in a year, while the average customer takes out six loans in a year. And in some cases, debtors take out more loans to pay for their previous loan balances.
Consumers should only opt for a payday loan if they can repay the amount borrowed and fully understand the terms and conditions associated with their loans.
Alternatives to payday loans may include:
- Consulting Community Development Finance Institutions (CDFIs): These are independent organizations that offer loans to those who may have exhausted all other loan options. CDIFs are typically local organizations that are able to offer more personalized services and options. Such entities must also be licensed under the FCA.
- Personal loan: Personal loans often allow borrowers to take out loans for longer periods of time, with specific payments made each month and with fixed interest. This can help borrowers budget and better meet debt terms. Unlike payday loans, installment loans are not borrowed against an asset.
- Paycheck advance: Consumers can ask their company or place of work to issue an employer-led payroll advance, which allows consumers to get part of their upcoming paycheck days or weeks ahead of time. This option can be beneficial for covering bills that may be due in between paychecks.
- Cutting discretionary spending: Financial experts recommend that residents cut out unnecessary expenses in order to save money and be prepared for potential cash shortages.
- Borrowing from a trusted friend or family member: This option can make the most sense for those who have less capital and are not able to borrow from proper institutions. Consumers should make sure to get such agreements in writing, as these negotiations can be risky because they do not have formal institutions to remedy any late payments.
- Utilizing welfare assistance programs:
- UK residents have a number of assistance programs at their disposal. Those who are London residents can consider the Children’s Society website for some resources.
- Scotland residents can visit their government website to inquire about local financial assistance programs.
- The Discretionary Assistance Fund for Wales can be a viable resource for those who reside in the country, and likewise, financial support is also available specifically for Northern Ireland residents.
- Asking for payment extensions: In dire situations in which local or federal institutions may not be able to offer appropriate assistance, consumers may ask utility companies and other billing agencies for extensions on debts
Make a budget
Financial experts suggest making a budget to determine loan affordability. Budgets may not only promote responsible debt management but can also help highlight positive or negative financial habits that need to be assessed.
Experts suggest following a 50/30/20 budgeting plan that recommends spending 50% of your income after tax on necessities, 30% on personal desires, and at least 20% on savings. Putting 20% of each monthly income provides a sense of security in the event of a financial emergency and can subsequently reduce monetary stress.
Consumers can also choose to speak to a financial advisor. Financial advisors can offer a wealth of knowledge and experience regarding the best spending practices. Planners can also offer impartial opinions about your money and give insight into areas that can be steered in the right direction. With a third-party opinion, monetary issues might seem more bearable.
Residents of the United Kingdom can utilize online budgeting tools and planners to manage their money better.
Save money by avoiding high-cost lending
Each UK household spent or invested more than £900, on average, than it received in income in 2017, according to the Office for National Statistics.
This shortfall led to borrowing or dipping into savings. In fact, families took out almost £80 billion in loans in the same year, but only saved £37 billion with UK banks, which was the lowest amount since 2011.
Financial experts also advise that borrowers save more in order to avoid high-cost lending.
If you are ready to request a payday loan, please let us help you get started. It only takes a few minutes to get started.