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What is a Payday Loan?
A payday loan is used by borrowers for small amounts of £300 or £500 to pay for emergencies and it is then paid in full on their next payday from work. Borrowers typically pay higher rates of interest than typical loans, but this is because payday loans often assist those with bad credit scores to receive funds in 1 hour or 24 hours.
Falling under unsecured loans, the money is transferred in one lump sum and repaid in full on their next payday from work (usually around 2 to 4 weeks time). Proper Finance works with a range of FCA regulated direct lenders across the UK – and you can get a free quote when you complete our application in less than 3 minutes. Simple click on the ‘Apply Now’ button below to begin!
How Much Will a Payday Loan Cost Me?
Repayment Example: If you borrow £100 for 30 days and repay on time, you will pay a maximum of £24 in interest with a total repayable of £124, based on 0.8% per day. Maximum default fee for late repayment is £15. Representative APR 292%-1272% depending on credit score. (Source: MoneyHelper)
What Are Payday Loans For?
Payday loans can be used in numerous different ways, however, one thing they all have in common is that they are used as financial support when waiting for payday. For example:
- Unexpected medical bills
- Car repairs
- Temporary inability to cover bills
- Rent or mortgage payments
- Transportation costs
- Preventing overdraft fees on bank accounts
- Temporary relief for debts
- Sudden job loss or reduction in income
Payday loans are often used for emergencies, such as household repairs or pressing bills. Whether you need to borrow £200, £300 or £500, borrowers typically use this loan type when experiencing shortfalls in their cash, and won’t have access to the money they need until their next payday.
You should never become reliant on payday loans. This type of finance should only be used for unexpected emergencies or other short-term periods where you’re low on cash. You should avoid having to borrow payday loans for long-term periods when possible.
Can I Get Payday Loans With Bad Credit?
Yes, some lenders will accept applicants with bad credit, no credit, as well as other adverse qualities on their credit history such as defaults and CCJs. For applicants with poor credit, lenders may adjust the loan amount or the length of period that was initially applied for. This is to help the borrower manage repayments.
In order to be eligible for a payday loan, applicants will have to show evidence that they are capable of making repayments. This can be shown through having a job as well as a stable, regular income. You may need to provide proof of employment and salary to the lenders, including payslips or any relevant bank statements.
How Do Repayments Work For Payday Loans?
Repayments for payday loans work through Continuous Payment Authority (CPA). This arrangement lets the lender automatically withdraw the repayment amount from the borrower’s bank account on a pre-agreed date. The use of CPA makes the repayment process easy for everyone involved and reduces the risk of missed payments.
CPAs are not the same as a direct debit or standing order. The difference is that with CPAs, your contract is directly with the merchant, as opposed to instructing your bank With direct debits and standing orders, you are instructing your bank to pay a lender at a certain date.
With CPAs, borrowers and lenders agree on a specific repayment date, usually aligned with the borrower’s payday to coincide with their income schedule. On this agreed-upon date, the loan amount (plus any fees and interest) is deducted to settle the payday loan.
One key positive of payday loan repayments is the ability for early repayment. Borrowers typically have the option to repay the loan ahead of the agreed-upon date, which is not always an option for other loan types.
Does Proper Finance Work With Payday Loans Direct Lenders?
Yes, Proper Finance partners with payday loan direct lenders only who comply with the regulations set by the FCA. This means means that they can process your application from start to finish, as well as handle the repayments and collections.
We do not charge the customer any fees for using our service, only take a commission from the direct lender if your application is successful. Once you are dealing directly with the lender, you can be rest assured that your details will not be sent anywhere else and there will be no other third parties or middlemen involved.
Can Payday Loans Improve My Credit Score?
Yes, payday loans can actually improve your credit score. However, this is only when the borrower keeps up with the loan repayments. When you make repayments on time, and keep this up throughout the repayment period, this can build up a good history of borrowing, showing that you are capable of handling a loan.
However, if you do not make repayments on time, or have to default on the loan, this can worsen your credit score. Poor management of a payday loan suggests that you are not capable of borrowing, can damage your credit score and restrict your options of borrowing in the future.
It’s important to make sure you can safely manage any type of loan you take out, and be responsible with your finances throughout the repayment period. This can help you to keep up with repayments, and start improving your credit score instead of making it worse.
Am I Eligible for Payday Loans?
The requirements for eligibility can vary between lenders – some accepting those with adverse credit histories, whilst others will require a good credit score. Whilst the eligibility criteria can vary between lenders, some of the main qualities most will need of a borrower include the following:
- You must be over the age of 18
- You must be a UK resident
- You must hold a valid debit account
- You must have contact details, including a working phone number and email address
- You must have proof you can manage repayments on the loan
You can find payday loans that accommodate for a range of different borrowers, including those with bad, fair or no credit histories. Proper Finance works with a range of different lenders, helping to access the finance that’s right for you.
Useful Guides
- What people use payday loans in the UK?
- What to consider before applying for a payday loan
- How do repayments work for payday loans?
- What happens if I cannot repay my payday loan?
Apply for Payday Loans With Proper Finance
Proper Finance work with some of the leading lenders in the UK. Any loan you find through our site will come from a safe and reputable lender. You can find great deals on a range of different payday loan options when using Proper Finance.
Click the “apply now” button below to start your online application with Proper Finance today. Our application is quick and simple to complete, and won’t charge you any upfront fees.
Warning: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk