A payday loan is a small loan intended to help a person financially until their next payday. Typically, a payday loan is used when an unexpected expense arises, such as an unanticipated bill or an emergency, in order to bridge the gap before the next pay date. It is a form of unsecured credit, meaning there is no collateral required.
Payday loans are easy to apply for online with a simple application form and are normally available 24/7. This type of credit also often comes with:
This quick availability of payday loans means a borrower can access a loan as soon as they need it, with almost no waiting time. It provides flexibility for the consumer and security in knowing they have control over when the loan is paid back.
Payday loans can be cheaper than using unarranged overdrafts from banks. Banks in the UK can charge a daily fee of up to £8 for exceeding an overdraft limit, whereas payday loans only charge a daily percentage of what has been borrowed, up to a maximum of 0.8% per day, which can work out cheaper, thus providing a reasonable alternative.
Although loans can be granted by high street banks at lower interest rates, they are usually for much larger sums and longer time periods, and they often require a long and stable credit history. Payday loans on the other hand can be granted to consumers with poor credit history or no credit history, making them a potential solution for short term needs.
Payday loans on the other hand are typically repaid within a month to 35 days of being withdrawn and subsequently the length of time for which interest accrues is much shorter so the interest on the balance is lower. However, if the customer thinks they might want to spread their repayments over a longer time frame, short term loans can offer a suitable compromise.
Different companies offer different loan terms so it is always best to shop around or use a loan comparison website until you find a loan that suits you, as even with a poor credit record, you could still be approved for a payday loan if you meet the creditworthiness and affordability criteria set by your chosen lender.
clearandfair.co.uk is a straight forward loan comparison website which compares direct online lenders who offer payday loans. We show you how much you will have to pay back and you decide which lender to apply with. Our payday lenders are ranked by the lowest repayment amount over the time period you select and, as an unbiased loan comparison site, lenders will always be listed solely based on the lowest total amount repayable for the loan that you are looking for.
We only list lenders who are regulated by the Financial Conduct Authority (FCA). All lenders must comply with the regulations set by the FCA. New regulations were introduced in 2014 which were designed to improve consumer outcomes and prevent lenders from charging excessive interest rates. Among other conditions, the new regulations require:
An approved customer should always be able to pay back the loan while having sufficient funds to meet regular financial commitments.
The regulations also include requirements for a maximum default charge of £15 for a missed repayment and a total cost of credit cap of 100% which means that a lender cannot charge more than double what was borrowed by the consumer even if the loan becomes overdue.
Payday loans from the direct lenders are, as the title suggests, designed to tide over a person’s finances between paydays, offering short term, financial support, and at Clear And Fair we aim to make the research process quick and easy with our loan calculator. Simply select which type of loan you want, slide the bar to select the amount you wish borrow, the date you would like to repay the loan and in seconds the results will appear.