Short Term Payday Loans
Borrow up to £10001 for short term purposes
These one month loans have always been a quick way of getting a small sum of cash, perhaps just £200 or £300, to tide you over until your next pay day. But there have been downsides. Lenders are now directly addressing these issues as well coming up with new types of cash loan that might prove to be a better alternative - instalment loans and small guarantor loans. It could be worthwhile looking at these options too.
If you are thinking of applying for a loan then please make sure that you are able to repay it on the due date. No lender wants you to end up with serious money problems. If you need cash for longer than a month then there are more appropriate options you could consider.
Use our Quick Start tool to explore your options
With just 4 quick questions our Quick Start tool can help you identify the small cash loan options that may be open to you - there may be more than you think!
- Borrow up to £10001
- We work with trusted lenders only
- Payouts within 24 hours are possible
- Our lenders have responsible lending policies
- Only use this type of loan in exceptional circumstances
- Only use for very short time periods
- There may be cheaper and more flexible alternatives open to you
- Ensure you can repay on time
- Ask yourself if this is the correct type of borrowing for your needs
- Check if this type of borrowing is cost-effective
- Borrow if you can't realistically repay it
- Roll-over repayments
- Worry about the APR% - look at the absolute cost of repaying
For detailed answers to any questions you may have you should check out our FAQ section. Here we cover all the main issues that you are likely to be wanting to find out about. Otherwise you can apply now for your loan.
Our Approach to Payday Loans
These are a legitimate type of loan. The recent issues with them have been because irresponsible lenders have targeted people for whom a one month loan was simply the wrong type of credit. The industry has cleaned up. We are not a lender but we work with a technology partner who only works with responsible lenders - those who lend ensure that an applicant can afford the loan and would not be put under any financial stress by it. If you have a reasonable income, have a reasonable credit history and can repay your loan in full on your next pay day then this type of loan may be suitable.
Other Small Cash Loan Options
Other options are available (in probable order of cost, lowest first):
- Doorstep loans - otherwise known as home credit, where you borrow up to £2500 (subject to affordability) with service to your door. Make weekly repayments to your agent who visits you.
- Guarantor loans - an option exists to borrow up to £750 for 6, 9, 12 or 24 months. You provide a guarantor (can be a non-homeowner) which means your interest rate is reduced.
- Instalment loans - borrow up to £2000 that you repay in instalments over 6 to 12+ months
We have further information on cash loans.
A Brief History of Payday Loans
The Early Days
- The basic principle of a short term loan repayable on a person's next pay day was created in the USA in the 1980s. Properly regulated short term lending was seen as a far better alternative to illegal loan sharking.
- This lending arrived in the UK on a tiny scale in the 1990s focusing initially on cheque cashing.
Growth & Expansion
- UK lending rose from £100m in 2004 to £2.8bn in 2012 (but compare this sum to the £55bn of outstanding credit card debt and £200bn of other consumer credit).
- The UK market for these loans grew particularly fast after the 2008 financial crisis. With banks in trouble and closing down access to credit for those with all but the best credit ratings lenders felt able to fill the void.
- It is estimated that 10.2m loans were taken out during 2012 with US-owned lenders dominating the market.
- In this period there was an explosion of loan advertising and in 2012 it was estimated that a TV viewer would have seen around 150 adverts!
- By 2012 the largest name in the UK market was Wonga - a business that only started in 2006. In 2012 its turnover was £185m and it generated £46m of profits.
Concerns & New Regulation
- As a reaction to the rapid growth in the market, with what was seen by many as the predatory behaviour of some lenders and the charging of excessive interest rates, a number of high profile individuals started to campaign for better regulation of the UK market.
- In April 2014 the newly formed Financial Conduct Authority (which replaced the OFT) confirmed its commitment to "clean up" the short term loans industry.
A Brave New World
- In January 2015 the FCA implemented a series of rules affecting all "high cost short term credit" lenders (including these loans):
- a cap on interest and fees equivalent to 0.8% per day
- fixed default fees capped at £15
- a total cost cap of 100% - meaning a borrower can never repay more than twice the amount they have borrowed.
- Since 2014/15 the UK payday loan market has contracted markedly with a number of well-known lenders leaving the industry. Other lenders have been forced by the FCA to make repayments to borrowers and write-off substantial amounts of outstanding debt.
- The Outcome of these changes - borrowers can be assured that lenders are now acting in the borrower's interests. Charges and interest are capped and lenders have to behave properly when chasing outstanding debt. Where a lender does not believe a borrower can afford to repay the loan they will decline the application.