Payday Loans

  • Borrow £100 to £1000
  • Repay quickly
  • Compare lenders online
  • Instant decisions
  • Same day payout
  • Alternatives available
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Compare Top 10 Payday Loans

Payday loans are a really quick way of getting a small amount of cash for a very short time period. As you’ll know they have been heavily criticised, but these days the FCA and the payday lenders themselves have largely addressed the problems.

Other types of cash loan have also been developed that may suit you better, so it’s worth looking at these as an alternative to a payday loan.

If you are thinking of applying for a payday 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 probably more appropriate options.

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Warning: Late repayment can cause you serious money problems. For help, go to  moneyadviceservice.org.uk.

How to Get the Best Payday Loans in the UK

Even though the payday loan market has been through a major overhaul in recent years there are still plenty of responsible lenders to choose from. To find the best payday loan for your needs you should use or FREE enquiry service. We’ll show the top 10 UK lenders who say they’ll lend to you in principle. If you’re not sure this is what you need then look at these other options.

What so I need?

1: Decide what you need

Look at your budget and decide the amount you need to borrow to see you through. Then decide how much you can afford to repay at the end of the month.

Finalise the loan

3: Finalise the Loan

The lender will assess your circumstances and conduct an affordability check. Hopefully your application will be approved.

Receive the cash

4: Receive your Money

All lenders are capable of paying out your loan within an hour or two of approving your application. It will be sent to your bank account.

Using our free loan search service means you’ll be:

  • matched to the lenders who will lend to you in principle
  • able to compare the best deals offered to you
  • able to complete your application online and if accepted get your cash loan into your bank account within a few hours.

The other benefits of using our search and comparison service are that you will only see the lenders who are able to lend so you’ll save lots of time not having to apply directly to lenders only to be rejected. And by seeing all the loan deals before you commit to a lender you can be more confident you’ve got the best payday loan deal.

Payday Loans: Dos and Don'ts

Payday loans are a form of credit that should only be used in very limited circumstances. Otherwise, you should use a different form of short to medium-term credit. To help you decide if a payday loan is right for you consider this list of dos and don’ts.

Do:

  • 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

Don't:

  • Borrow if you can’t realistically repay it
  • Roll-over repayments
  • Worry about the APR% – look at the total cost of repayment

If at this point you still aren’t certain that a payday loan is the right option for you then you could consider some alternatives. We also have an interesting article on where else you could borrow the typical amount of £250:

Same Day Payday Loans

Today’s online payday loan lenders are able to provide an instant lending decision because the technology is in place and the sums are relatively small. With our partner, we’re able to work with these direct lenders and allow a seamless interface with their application systems. This means that using our free enquiry service allows you to search multiple lenders simultaneously.

Being able to provide a fast loan service has always been one of the strengths of payday loans. Often the sum you’re borrowing can be credited to your bank account within an hour or two and certainly the same day. When you need a quick loan experience there’s nothing quite like a payday loan. But the usual warnings apply – just because you can get a loan fast doesn’t mean that you should get the loan if you can’t reasonably expect to be able to repay it!

 

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ALTERNATIVES TO PAYDAY LOANS

A payday loan may not be what you want. Maybe you’re concerned because of what you’ve heard about them. Or maybe you simply need to borrow over a slightly longer timeframe. Whatever the reason we have some alternatives to payday loans that you could consider:

Consider a Line of Credit: We’re working with Drafty to provide short term credit (£50 to £3,000) that could be a good alternative to a payday loan, credit card or bank overdraft. No fees. Learn more.

How Much Can Lenders Charge for a Payday Loan?

First, it is possible that a payday loan does not suit your circumstances – maybe you:

  1. don’t have a bank account
  2. want to repay over a period longer than 1 month
  3. would prefer a face-to-face meeting

 

But if you still think a payday loan is the right type of loan for your situation then it is also worth noting that there are now restrictions on what payday lenders can charge, namely:

  1. a maximum daily interest rate of 0.8% (so no more than £24 per £100 borrowed over a 30 day period)
  2. no more than double the amount that was borrowed (e.g. if you borrow £100 you cannot be asked to repay more than £200)
  3. a limit of £15 for a charge if a borrower defaults on their debt

The imposition of these limits imposed by the FCA in January 2015 meant that many direct payday lenders left the UK market. Those direct lenders that remain are now more cautious, but they are also less able to compete on price. Most lenders are likely to charge similar amounts for their short term credit.

Having a bad credit history shouldn’t preclude you from borrowing. Loans are short term and a lender will be more concerned about your ability to repay the loan in a few weeks than what might have happened in your credit past. So while credit problems may not be the issue you expect you should be prepared to jump through some hoops in relation to proving you can repay any new payday loan – the so-called affordability checks.

If you have questions about payday loans make sure you check out our FAQ section. Here we cover all the main issues that you are likely to be wanting to find out about.

How Payday Lenders became Responsible Lenders

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 considerably with many well-known lenders leaving the industry. These include Wonga, QuickQuid, WageDay Advance, Payday UK, Payday Express and Money Shop. 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 those lenders that remain 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 payday lender does not believe a borrower can afford to repay the payday loan they will decline the application.
 

Payday Loan
Guide

If you’re uncertain which type of credit might suit you or you have a money problem then one of guides may help you. We summarise each type of loan and their pros and cons, and address issues regarding debt and credit ratings.

Got a Question about Payday Loans?

Answers to Common Questions

What are payday loans and how do they work?

Payday loans are small cash loans with the very specific purpose of getting you through a short term budgeting problem until your next pay day. On that day you should repay the loan in full. Payday loans should never be used to try to resolve a medium or even long term financial shortfall. The costs are simply much too high.

This is an example of how a payday loan could legitimately be used – your washing machine breaks down and will cost £150 to repair. Your normal monthly budget it tight. You don’t have any savings so you need a small amount of cash to get you through. You use a payday loan of £150 and on your next pay day repay the lender the £150 plus (approx) £45 interest.

Are payday loans different to cash advances?

In the UK the terms “payday loans” and “cash advances” are used interchangeably. However “payday loans” is the predominant term as it is searched for on Google ten times as often.

Who could consider using a payday loan?

If you are in paid employment with a regular income but have few savings to draw upon in the event of a financial emergency then a payday loan could make sense.

But only if you can repay the loan in full on your next pay day from your pay only (i.e. don’t take out a new loan to repay this loan!).

How can I get a payday loan?

Simply complete our enquiry form and we’ll find you a payday lender who can help you in principle. We don’t charge any fees so it will cost you nothing to find out what your options are. You are not obliged to proceed with any offer that may be presented to you.

You will then need to complete the final stage of the online application process. Lenders typically provide 100% online processes so you will not need to handle any paperwork, and you should receive your loan directly to your bank within an hour or two and certainly the same day.

Please remember that lenders operate responsible lending policies.

Which payday loans are the best?

All lenders offer very similar financial terms because of rules laid down by the FCA (explained here). When you use our free enquiry service we’ll show you which lenders are willing to lend in principle and then you can compare their offering. It should then be obvious to you which offers the best payday loan for your needs.

What payday loans like Wonga, Oakam, Lending Stream and Mr Lender are there?

Wonga has stopped trading, but there are plenty of other lenders in the short term loan market:

How are payday loan charges calculated?

The charging structure of payday lenders is pretty straightforward and there are statutory limits to these charges. They charge a fixed amount for each £100 you borrow and then you repay the full amount on your next pay day. The costs to truly avoid are the so-called roll-over fees.

So, make sure you are able to repay the full amount of the loan plus interest on the agreed date.

Where can I get a payday loan with a low interest APR%?

All high-cost short term loans, of which payday loan are one, must abide by upper limits to their interest and charges. These are explained here. These limits are not generous and lenders struggle to compete on APR%. Instead they try to compete on other terms. But keep in mind that even though there are statutory limits on interest rates and the total amount that can be charged payday loans are still a relatively expensive way of borrowing.

What should I consider when borrowing?

The first thing is that we would urge you not to borrow if the chances of you repaying on time and in full are doubtful. If you borrow knowing you cannot repay the loan then this is a type of fraud. If you are constantly struggling to balance your domestic budget then the last thing you need is more debt. In this situation, you might do better to seek financial advice from an organisation like the Money Advice Service.

If you do borrow then keep in mind that payday loans are an expensive short term solution. Are there cheaper ways to get the emergency cash you need? Can you borrow from friends or family?

With a payday loan lenders will get access to your bank account using your debit card. These so-called “continuous payment authorities” mean lenders can take money from your bank account without having to check with you first.

Can I get a payday loan if I don't have a bank account?

No. All payday lenders issue their loans direct to the applicant’s bank account using the “faster payment” system, or via BACS. If you don’t have a bank account then you could consider a doorstep loan instead.

Do payday loans ever use guarantors?

We are not aware of any payday lender who requests the provision of a guarantor for the loan. In other words payday loans don’t need a guarantor.

What alternatives to payday loans are there?

The problem with payday loans is that while they are very “easy” to organise they can be expensive and inflexible. The fact that you have to repay the full amount plus interest on your next payday means that something else in your budget has to be cut next month to compensate. This isn’t always possible hence the risk of the debt rolling on and the debt getting larger as further interest and charges accrue. This is the downward spiral you need to avoid.

Fortunately, there are some alternative “short term loans” you could consider. Repayment terms are typically over a few months so that each repayment is smaller. The APR% will be lower too, but keep in mind that the total amount you repay may actually be greater than with a payday loan because you are stretching out the repayment period.

You can also take advantage of our Find Loan tool to explore your loan options by answering just 4 quick questions.

Which is better, a payday loan or an instalment loan?

Instalment loans are an evolution of payday loans that recognise the difficulty some people have of repaying a loan on their next pay day – simply put it is generally easier to repay over a number of months. Instalment loans that are shorter than 12 months in length have to abide by the same interest and charges rules (as laid down by the FCA) as payday loans do. But instalment loans are more flexible than payday loans.

Should I use a payday loan or go to a loan shark?

Let’s be clear. While payday loans have had a bad reputation they are fully regulated by the FCA and are offered by regulated lenders. Loan sharks are illegal money lenders. Even though payday loans may still be viewed as unethical the lenders won’t hound you constantly, will stick to the loan agreement terms and aren’t allowed to let interest costs escalate uncontrollably.

We’ve written about loan sharks and illegal money lenders a number of times in our blog:

Will a payday loan affect my credit rating?

As with any credit if you repay the payday loan on time and in full there should be no impact on your credit score of using one. Its use will be visible to anyone you seek credit from in the future. While the payday loan won’t affect your score a lender (e.g. mortgage lender) may treat the use of a payday loan as a “red flag” even if you paid it off correctly.

Can I get a mortgage if I've had a payday loan?

It is definitely the case that some mortgage lenders will reject applications from people who have used payday loans. They treat the use of a payday loan as an indicator that the applicant’s personal finances are not in order – i.e. they have had to resort to the use of payday loans to cover cash flow issues. But not all mortgage lenders are so blunt. Others will scrutinise mortgage applications on a case by case basis and look at the applicant’s situation “in the round”. Our mortgage partner is more flexible.

What should I do if I am going to struggle to repay on time?

As is the case with any debt, whether it be a loan or a bill from a utility company, you must confront the issue if you doubt that you can pay on time. You must contact your lender and discuss the options open to you. Don’t delay.

If you have already missed one or more repayments then your debt will be increasing fast. A good idea is to also get in touch with organisations like:

What happens if I can't repay my payday loan?

Here are some things to consider:

  • If, as you approach the repayment date for your loan, you don’t think you’ll be able to repay it you must contact your lender a.s.a.p. They are obliged to consider your situation and if necessary propose an alternative repayment plan.
  • You must be clear about the terms of the loan as you may incur extra charges should you fail to repay the loan.
  • Failure to repay your loan on time will be reported to the credit reference agencies. This will be registered on your credit file and may hamper your ability to get credit in the future.

Never take the issue of credit lightly. You should only ever borrow if you believe you will be able to repay the loan, and you should be prepared for consequences if you fail to. It always makes sense to talk to your lender as soon as you suspect a problem.

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Written/Reviewed by: Amanda Gillam

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