Payday loans, we’ve all heard of them but what are they? Payday loans are simply loans that you get to cover you until, yes, you guessed it, payday! They’ve had a lot of negative press recently with criticism aimed at their high interest rates, charges and collections practices. However, they can be pretty useful if something comes up mid-month that’s going to make you a bit short until your next payday. Maybe you’ve got an unexpected bill, or your car’s broken down and you need some quick cash.
Payday loans can be an expensive way to borrow money, they should only ever be used as a short-term solution with most companies only lending for up to 30 days. For every £100 borrowed you can expect to pay back around £130, however this varies from lender to lender. So why do they have APRs in the 1000s? Well the APR system is designed to measure rates over a year, not a month, so if you use it to compare rates over a month it doesn’t translate very well.
So what should you look at aside from the APR? Fees. Payday lenders charge all kinds of fees, fast transfer fees, late payment fees and extension fees if you decide to rollover your loan. These can quickly add up which is why it’s so important to do your research and make sure you can pay back on time. It’s also worth checking out what other customers have to say about payday lenders as many of them have pretty bad reputations amongst consumers. Fortunately, you’ll find one of the best resources online to do this through our comparison table. Once you’ve identified a lender that you’re interested in, check them out on our Loanwiki where you can read reviews of other users who’ve experienced what it’s like to be one of their customers.
Before you apply for a payday loan you’ll need to make sure you are over 18, have a UK bank account, a valid debit card and you must be either full time or part time employed. Warning – Payday lenders are also lenders of last resort – find out what that means here.