Payday loans refer to borrowing up to £1,500 from a lender and repaying on your next pay date. The money is transferred to your bank account in one lump sum and the borrower must repay the loan amount and interest when their salary next goes into their account, usually the last Friday of the month.
Depending on the lender, first time customers can borrow up to £500 but once you have repaid a loan successfully, you can borrow as much as £1,500. Since the loan will be repaid on your next pay date, a typical payday loan will last 7, 14 or 21 days but some lenders will allow you to repay up to 45 days later or repay over 3,6 or 12 months in instalments.
To be eligible for a loan, you must to be over 18 and in full time or part time employment living in the UK. Most lenders will carry out credit checks and affordability checks when making their decision but there are also lenders who offer bad credit payday loans and for those people on benefits.
To apply for a payday loan, simply click on one of our featured lenders in the table above. This will take you directly through to their website where you will be asked to fill in the application and if successful, the funds will usually be transferred to your bank account on the same day. We are a direct affiliate of the companies we feature. We do not take any of your details and sell them onto any other companies and our service is completely free to use.
Payday loans are typically used for short-term emergency expenses. So if you have a broken down car, an expensive medical bill or a boiler on the brink but you don’t have enough money that month to cover the cost, the idea is that the loan will help tide you over until payday. So when you next receive your income from work, you can repay your loan and be in a better financial position.
When you need money because of something urgent, you need the money fast so you can understand why borrowers in the UK look for payday loans where you can receive funds within the hour. It is best to have money saved away for a ‘rainy day’ and this usually involves having around 3 to 6 months of your salary saved in a bank account or a safe place and only using it for emergency purposes. However, we appreciate it is not always easy to save money and especially when you have an emergency which comes from out the blue, you sometimes need a little extra finance to help you through the month.
Borrowers can save a lot of money if they compare payday loans effectively. This is because all payday lenders have different rates of interest and terms of the loans that they offer. Recent studies carried out by the Competition Market Authority showed that borrowers would typically apply with the same lender over and over not realizing that there are cheaper alternatives available. By finding a cheaper payday loan, the average customer could save over £100 a year.
Payday lenders offer their rates in the form of APR and this refers to the Annual Percentage Rate. It might be confusing that the percentage is in the thousands but this is because APR is based on the payday loan as if it were taken out for an entire year and therefore has been multiplied. APR is the consistent measure of interest of all loan and financial product so it serves as a useful comparison tool.
Other ways to compare payday loans involve looking at the daily interest rate that has been capped at 0.8% per day or the cost per £100 that has been capped at £124. Please also use the repayment examples we have provided to give you a better idea of what you would repay. Any repayment example below this price cap suggests a very competitive rate.
When using a payday loan comparison tool like ours, you should be able to find a lender that suits what you are looking for – whether you want to repay over a longer period of time or if you need to find a lender that can transfer funds immediately. The best payday loan lenders are those that carry out affordability and credit checks, handle your data securely and allow you to repay your loan early. So if you decide that you have the funds earlier than your pay date and are ready to repay sooner, you have the flexibility to do so and save money in the process. Using a comparison site, you may also find new payday lenders that have just entered the market and offer more competitive rates.
Instant Payday Loans – this refers to loans that are instantly funded to your account once you have completed the application. This is available from some lenders and is used by borrowers looking for an urgent loan. For most lenders, they will need to run further checks, and this may involve speaking to you on the phone in order to confirm details or verify your employment.
Online Payday Loans – most traditional lenders operate as stores on the high street. Only in the last few years have you been able to apply for loans online. This means that entire application is 100% online so the from entering your details, corresponding via email and receiving the funds to your bank account, you don’t have to fax or post any documents and everything can be processed online.
3 month payday loans – this involves borrowing the money in one lump sum and then repaying over 3 months in equal instalments or in one lump sum at the end of the 90 day period. By repaying over 3 months, it offers greater flexibility if you need longer to repay the loan and above all, you get to keep the money you borrowed initially for longer.
12 month payday loans – this offers even more flexibility because you have an entire year to pay off the loan. Some lenders will allow you to repay a 12 month loan on every payday of the month whilst others will allow you to keep the money for an entire year and then only repay at the end of the period.