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Online Payday Loans UK

Online Payday Loans UK

Designed to be the ideal financing option for emergency use, payday loans are a quick but pricey way to borrow. The average payday loan in the UK is estimated to be 260 pounds to be paid within a period of 30 days according to Wikipedia. Payday loans have become increasingly popular in the UK in recent years. This is because of the changes made by the Financial Conduct Authority (FCA), when it took over regulation of the consumer body. This governmental body that oversees the payday loans industry made significant changes that favour the consumers:

 

  • Lenders are required to display risk warnings on all financial promotions and also run strict and enhanced affordability checks.
  • There is a limit of two unsuccessful attempts at collections.
  • The collection processes are transparent and highly regulated with a limit on the number of times a loan can be extended.
  • Interest and fees must not exceed 0.8% per day of the amount borrowed on all high-cost short term credit loans.
  • The consumer will not be required to pay back more than double what they originally borrowed.
  • Default charges not exceeding 15 pounds will be applied to borrowers who do not repay their loans on time.

Who are the payday loans customers!

Online loans ukThe ability to access short term loans online with same day payout has reeled in many people who want to solve various financial needs in their day to day lives. Managing the stresses of income and expenditure is a monthly headache for many and hence accessing the short term credit saves them from bigger debts such as council tax and utility bills.

Most o loan customers use the money to cover emergency expenditure. Some use the money for living expenses such as groceries and utilities while others on vehicle expenses. Bottom-line is, most payday loan customers are deep in financial difficulties hence the need to borrow.

According to a review done by The Competition and Markets Authority, the customers were more likely to be male and younger than the UK population as a whole. In addition to that, it was found out that there is a slight difference between online customers and high street customers. The high street customers average age was found to be 35 and were less affluent than their online counterparts with an average age of 38. The online customers were more likely to have a store card, credit card or savings account. Older customers, women, low income earners, older people and those in part-time work were more likely to have used high street lenders.

Despite having many other loan options, customers prefer payday loans since it’s a suitable option to cater for their needs.

Considerations before getting a payday loans

It’s a no-brainer that before taking any loan, you need to make careful considerations:

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Make plans on how you’re going to pay back the loan.

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Consider repayment in installments.

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Think about your current financial situation. Will you be able to have the money plus interest next month? Or will you need to cut back considerably on spending? The goal here is to pay back what you owe in full to avoid rolling over.

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Ensure that the lender you choose is regulated by the Financial Conduct Authority.

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Borrow from a direct lender only.

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Borrow only what you need. You may be tempted by the high principle most lenders offer on a single loan. Keep in mind that borrowing more also means more in interest and you still have to repay the loan when you receive your next paycheck.

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Make smart comparisons on the multiple lenders on their deals and offers. This is as easy as filling out simple search form.

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Be detail-oriented. Take your time to review the terms of the loan carefully and understand the loan agreement. Some of the details to look into are the pricing structure of the loan, the rolling over rate and the admin fee. These cost elements greatly determine how beneficial a payday loan can be or not.

Advantage of Payday loans

So now that you know what to look out for, there are some advantages of payday loans

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They’re easily accessible. Many cash lenders promise access to cash within 24 hours. Some are even available 24/7 and have online applications. Applying for these loans can take as little as five minutes.

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They have fewer requirements. Generally, all you would need to apply for a payday loan is; to be at least 18 years of age, have a regular job or source of income, a government-issued ID and an active bank account.

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Most lenders rarely check your credit. Getting a payday loan may not require you to have a credit history unlike traditional loans where you need good credit to be approved.

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It’s an unsecured loan. Payday loans are not secured by personal property unlike a traditional auto loan or a mortgage. This means that in the event you default, the lender cannot seize your property as consequence. However, payday lenders often have access to your bank account as a condition of the loan which can be a risk.

Money Advice has some good alternatives to payday loans but if you’re feeling cash-strapped, the following are some of regulated payday loan lenders in the UK you should consider:

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MYJAR- the loan term is 12 months. The loan value available is from 100-2500 pounds with the Representative APR  at 1270%

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The Quick Loan Shop- the amount available is 100-2000 pounds with a loan term of 18 months and the Representative APR of 1269.7%

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Drafty Payday Credit Loans- the loan value available is 50-1000 pounds with the Representative of APR 89.7% and the loan length is ongoing provided that the repayments are made on time

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THL Direct- the loan value offered is from 125-500 pounds with 0.8% daily interest on the principle. Have no upfront fees, late fees, late interest or default fees. Funds are paid directly from THL Direct into your bank account and you have the choice of repaying your loan weekly or monthly.

Equipped with this vital information on the best payday loans, you will find it easier to compare and apply for payday loans online.

Anyone struggling with payday loan debt, please see Step Change.

If you are looking for more information about payday loans we recommend The Government website

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