Frequently Asked Questions

Many of our visitors want to find out a little bit more about Payday Loans before they just jump in. So we've taken a few of the most requested questions and tried to provide you with a mini guide that explains why and what you are getting with your payday loan

faqs

What is a Payday Loan?

In it’s simplest form, it’s a short term loan designed to loan you a small amount of money until you get paid. Typical amounts are a few hundred pounds and typical borrowing time is a few days through to a maximum of 30 days.

How Do Payday Loans Work?

Our how payday loans work page explains exactly what information the application form asks for and the process for finding, applying and getting yourself a loan.

How do I qualify for a Payday Loan?

As long as you’re an employed UK resident, aged 18 or over and have a UK bank account, you’re qualified to apply.

Why does the APR on a Payday Loan look so high?

Let’s start at the beginning. APR means the “Annual Percentage Rate”. The Office of Fair Trading insist that every loan company displays an APR figure to show potential customers how much interest is calculated per year – year assuming compound interest is charged.

Well, Payday Loans are not annual and this is why you see the figures quoted at 1750% or more. Payday Loans are designed to be repaid within days or at most a 30 day period. Therefore, the amount of interest that actual accrues on your borrowing is no where near the figure that by law we have to show you.

It is simplest to let you see a quick example :

Type of Loan Loan Amount Months to Repay Total Repayment Interest Charges APR Actual Interest*
5 Year £1000 60 £1461.95 £461.95 16.09% 46%
30 Day Payday £1000 1 £1299.50 £299.50 1909.1% 29.9%

 

* Actual Interest is a far more accurate picture as you can see – provided you pay back the 30 day loan in fuill – it’s no more expensive than some credit cards. Plus if you only borrow for 2 weeks – it’s less than that.

Another way of looking at it is that because you pay only interest, you’ll pay back approximately £27 for every £100 of your loan, when borrowing for 28 days. This may vary slightly.

How do I apply for Payday Loans?

Any application through ComparePaydayLoans.co.uk is free and you are not restricted on the number of applications you can make.  We have done a lot of the hard work in pulling together the leading providers of short term loans – saving you the hassle of comparing each site individually.

To apply for a payday loan, simply choose the lender you feel suits your needs best and then clickthrough to their website in order to complete an application.

If your application is successful, you will receive an online agreement within minutes. Your cash should be in your bank within a couple of hours. You then repay the loan when you get paid.

Once you receive a decision, you can still back out if you wish. If you agree to the terms and conditions, your payday loan will be swiftly transferred to your account – usually on the same day. Repay the loan and interest when you are next paid.

How much money can I borrow with a Payday Loan?

Depending on your personal circumstances like current borrowing, rent and how much you need, the precise amount may vary, but you are free to apply for anything from £80 to £750 for a few days up to 2 weeks.

When do I actual receive the loan money in my account?

After you have received your offer and accepted it, then (depending on your bank) you should see the money in your account for use within a couple of hours. If you need the money the same day, we suggest that you always complete your application by 1pm or 2pm at the latest. Some lenders also provide the option to have your money delivered within the hour, but this may come with an extra charge.

Can a payday loan help my credit rating?

If you pay them back on time, payday loans can actually help to improve your credit score by demonstrating that you took a loan and repaid on time.

Most first-time borrowers will be accepted for an amount under £400. If you miss payments, or make multiple applications which are refused, this could damage your credit score. We don’t want this to happen, so if you can’t afford to repay your loan, please do not apply.

When will I need to repay the loan?

The terms and conditions for any loan vary but you need to pay back the amount of money you borrowed, plus interest charges within the lending period you agreed. If you use your debit card, then repayment of the loan can be done for you, so you don’t need to worry about forgetting.

It is possible in some circumstances to extend the repayment period, BUT this increases the amount you’ll need to repay. You should think carefully before doing this as pay day loans are designed as a short term finance solution and may be unsuitable for borrowing over a longer period.

Is the information secure when I apply for a Payday Loan secure?

Yes all your information is 100% secure and is also confidential. We only keep the information for as long as is necessary for the loan. All the information you provide is stored in compliance with the Data Protection Act 1998 and kept secure in accordance with our privacy policy.

If further information is required, the caller from the loan provider will always be discreet and your loan will not be discussed with anyone except you.

Can I use Payday Loans to clear existing debts?

Payday loans are a short term solution and can be a great alternative to unauthorised overdraft charges or missed payment charges. However, short term loans are not a long term solution by themselves.

If you are experiencing financial problems and have mounting debts, we would strongly advise you not to take additional loans from any credit providers.

Can I get any advice about loans and credit?

We cannot provide you with any direct advice or support ourselves. However, we do recommend that you get advice and support from one or more of the following specialist websites :

 

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