Why Compare Payday Loans Online?
Do I really need a short term loan? Why are they 5000%? What about my credit rating? See just why we really want to help you compare this financial product so that you can make an informed decision.
With all the furore over payday loans in the news, you may be wondering why we run this site. After all with interest rates of 5000%+ APR and a less than ethical stance on lending to those that clearly may not be the right people to lend money too, why do we have payday loans at all?
Why are There Payday Loans?
In the past 3 years the rise of the pay day loan has been incredible. Irrespective of the high interest rates, people have flocked to payday lenders to borrow small amounts of money over a short period of time, to cover a financial hole or an emergency payout.
Believe it or not, the payday loan can be traced back to 1959 and a Senate Bill in California. It took almost 4 decades of discussion and debate but in July 1996 a bill was finally approved and payday loans born.
In the UK, the recession since 2008 and subsequent "failing of banks" has in fact been instrumental in the rise of short term loans as people were refused personal loans, refused overdrafts and penalised by credit cards they owned.
Payday Loans are, and were only ever meant to be, short term loans for a period of a week or two. The high interest rates are such because you cannot apply an annualised rate to a loan that is not meant to cover that period. In addition due to their nature, the loans carry quite a significant risk to the lender as many see default rates of up to 20%.
Loans were always easy to apply for, simple to get approved for and then paid back directly from your bank account within weeks. The price to pay, something like £25 on a loan of £100 for 2 weeks.
Where there is demand for a product, we believe that it should be simple to get accurate and objective information in order to allow you to be able to make your own decisions knowing some of the facts and not being corralled into the first lender that sees your application.
If you need to find a loan, we help you to find the cheapest loan from over 50 lenders. This means you pay back less and therefore keep more of your money for yourself. This is even more important when the interest rates can be high.
Payday loans don't come with the best endorsement. From the glossy ads to interest rates that make your eyes water, why would anyone put their trust in financial lenders that seem to revel in the inability of punters to repay them on time?
As a website, we do not put more traditional loans alongside the payday loans. They are two completely different financial products and need to be seen as such.
Our website also provides you with clear information on payday loans, their risks and who should and should not be taking them out. As a means to an end for an emergency, the payday loan can be a very useful product. As a way to consolidate other loans, it is most definitely not.
Why Should You Compare Payday Loans Online?
The reason we set up ComparePaydayLoans.co.uk was to help provide more information about the payday loans rather than just giving you a set of whizzy sliders that allows you to choose the amount and length of your loan.
If you're looking for a loan, we wanted to give you a way to quickly and simply find the cheapest payday loan with a reliable and trustworthy company.
What's Currently Happening with Payday Loans?
The FCA took over from the Office of Fair Trading on April 1st and they have put in place a number of changes designed to increase the transparency of costs and trying to make sure those that take out a payday loan are not only aware of what it costs, but that they can afford it.
We have covered this more in our new lending rules for payday loans page.
Over time both the Government and the FCA are hoping this will not only drive up standards of the bonefide lenders, but will also drive out of business those companies that are less than
Who are the Payday Lenders?
Many have heard of Wonga or QuickQuid or any of the numerous others that advertise on TV and Radio. But where have they come from?
As the market has grown and awareness of the product spread, the sheer number of payday lenders and brokers has increased 10 or 15 fold and right across the UK. As you have seen through the press, not all the lenders are ethical and not all have their customers best interests at heart!
Lenders such as Wonga and QuickQuid are quick to advertise on TV and radio and even on Premier League football team shirts, but are they the best lenders for you to go with should you need to?
How to Protect Yourself
All payday lenders must have a Consumer Credit Licence or CCL. This is the law. Increasingly, the bonefide lenders are also signing themselves up to "Good Practise Charter". This is a self-regulated body which is designed to up the standards of all lenders that are signed up to it.
What Are the Options?
As well as payday loans, there are a number of other ways you could try to borrow money in a hurry! A lot of people
Family & Friends
Not always possible or desirable. Borrowing from your family or close friends can be fraught with danger. However, are they likely to charge you 5000% APR on a £100 loan. No it will cost you a bottle of wine or a beer or two, but at mates rates, you are probably best off.
If you have a bank account, do you have an agreed overdraft? If not then see whether you can get one that doesn't charge interest. For example M&S Bank or First Direct offer a free overdraft facility. Always check the fine print however and don't assume you can simply borrow the money on a what if maybe promise of repayment - you may find the bank charges rack up quicker than a payday loan!
Credit Card (with low interest rate)
Again if you have an existing credit card and you only need to borrow for 2 or 3 weeks, this would be a better route as it would mean you could pay of completely come statement time. Alternatively, if you have good credit, why not get a new credit card that allows for 0% purchases for a short period. Do not be tempted to use your credit card as a debt consolidator though.