Why Choose Payday Loans?
Payday loans have been set up solely for the purpose of dealing with short-term financial problems. A payday loan or cash advance loan is basically a relatively small loan for £80 to £1,000 that is repaid in full on your next payday. They are designed simply to help people overcome short-term financial issues, whether it be a final demand for a bill or any other issue that needs to be dealt with quickly.
Representative 2949% APR
Representative example: £275 borrowed for 28 days. Annual interest rate of 359.40% (fixed). Total amount repayable by one repayment is £357.36. 2949% APR Representative.
This makes them ideal if you need a relatively small amount of cash, up to £1,000 in a hurry. They are also very competitively priced costing you between £25 and £30 for every £100 that you borrow. This is not obvious at first because of the way we have to display the costs as an APR which means Annual Percentage Rate. The APR is only a true reflection of cost if the loan is going to be repaid for terms exceeding 12 months. However a payday loan will only last until your next payday so an annual representation of the costs is not a true reflection of actual cost.
What you should do instead is look at the total cost of borrowing the money if you do that you will see that payday loans are usually cheaper than the alternatives. See our Understanding Payday APR page for a more detailed explanation of this.
When you look at the comparative cost of borrowing smaller amounts of money instead of looking at the advertised APR, you will understand why you should choose a payday loan if you need some cash in a hurry.
Payday loans have taken the UK loans industry by storm especially since the credit crunch took a hold on the economy. So much so that there are considerably more loans being written by payday lenders than any other type of loan that is currently available. There are a number of reasons for this and we have detailed the main ones below.
- Convenience: Payday loans are quick and easy to apply for and can be paid into your bank on the same day that you apply*. Quite often this process can be completed online without having to fax any documents, and because most of the lenders accept a digital signature you do not have to wait for the application form to arrive in the post for you to sign and return to the lender. This makes them ideal when it comes to dealing with any financial emergencies that present themselves in between pay days.
- Transparency: When you take out a payday loan you know exactly where you stand even before you complete the application form. This is because most of the lenders will charge a flat fee based on the amount of money that you want to borrow, with no hidden charges or application fees whatsoever.
- Competitive Rates: Although at first glance the rates appear to be more costly than they actually are, when you compare the actual cost of borrowing using a payday loan as opposed to a traditional type of loan where you make multiple repayments spread over a number of months (see the table below), they are in fact very reasonable.
Payday Loans Charges
Payday loans carry a fixed flat rate fee - it is as simple as that. There are no hidden charges but some of our lenders charge a fee for administration. The cost of credit is generally around 29.95% for a 30 day loan so if you borrow £100 you will repay £129.95. You can borrow from £50 to £1,000, however some of our lenders will restrict the amount you can borrow to a maximum of £500 the first time that you take out a loan with them. As such even if your application is approved by a lender you may not actually qualify for the amount that you have applied for.
Please note that we deal with multiple lenders, whose interest charges and administration costs may vary. If your application is approved by one of our lenders, the actual costs will be presented to you when you are redirected to the lender's website to complete the application process.
|You Borrow||Total Amount Repayable|
The table above and the example below are for illustration purposes only, because the actual costs and charges will vary from lender to lender.
Once your application is accepted by a lender you will be redirected to their website to complete the application. The actual costs and also any charges (if applicable) will be illustrated to you. Make sure you are fully aware of exactly how much your loan will cost you before you agree to it!
Representative 2949% APR
Based on a total loan of £750 for a period of 28 days at a fixed rate of £29.95 per £100 borrowed (which is a fixed annual interest rate of 359.40%), the total amount payable in one lump sum payment on your next pay day would be £974.63 and the representative APR would be 2949% APR. At first glance the APR for payday loans might look quite high. It must, however, be noted that an APR, or Annual Percentage Rate, is the interest accrued in a year. As most payday loans run for a period of 31 days, this can be quite confusing and misleading. As mentioned before, the actual interest is 29.95%. An APR is a useful way to compare loans that are alike, but it is not quite so useful when comparing products that are not.
The following table illustrates this:-
|Type of loan||Amount||No. Of Repayments||Total Cost||APR||Actual Interest Charged|