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

Instant Payday Loans – Are They Real?

Every day, thousands of people across the UK are the unfortunate recipients of a very nasty surprise - a large, unexpected, and urgent bill. Did you know that, in the 12 months to June 2018, 5.4m Brits with bad credit ratings contacted a company offering short term loans to help them cover an emergency financial situation?

In this article, Little Loans explains:

  • what a payday loan is
  • whether you can get a payday loan fast if you have bad credit
  • what information you'll have to share with a lender on your application form
  • if you're approved, what might a finance company offer you?
  • which companies may give you access to pay day loans you need?

What are payday loans?

A payday loan (sometimes called a "pay day loan") is a type of loan with only one repayment date.

There are no monthly repayments - your loan is settled (or repaid in full) on the date you agree with your lender - as a rule, within 30 days of receiving the money into your bank account.

Your loan offers

On any payday lender's website, you'll see their representative APR displayed - that's the interest rate they charge on more than half of the loans that they approve.

Although useful, APR can be confusing when it’s applied to instant payday loans. That's because APR is an estimation of the fees, interest, and charges over a 12-month term whereas the term of a payday loan is rarely more than 35 days.

As an example, an authorised and regulated payday loan provider may legally charge a maximum of 80 pence per day for every £100 borrowed.

That can either be expressed as:

  • 0.8% daily interest,
  • 292% fixed annual interest, and
  • 1,256.3% APR

Also look out for the following:

  • late fees - your lender may legally charge you up to £15 for each missed payment
  • early settlement fees - a lender may charge you a fee for settling your loan in full.

Instant answer and access to cash

You'll typically get a very fast answer from a payday lender - usually within a minute or two. Their answer to you will be one of the following three responses, either:

  • an approval for the amount you've requested,
  • an approval for an amount less than you've asked for, or
  • that your application has been declined.

If you receive an offer, first make sure that you're happy with costs of the loan and second with the terms and conditions.

If you are happy, simply click the relevant button on the lender's website and they'll then transfer the funds over to you quickly - often within just 15 minutes*.

Can I get a payday loan with very bad credit?

There are over 80 different companies in the UK providing payday loans to borrowers whose credit history is less than perfect.

While what's on your credit score is still very important to them, they also take into consideration your current personal and financial circumstances when coming to a decision - much more so than a mainstream lender typically would.

Warning late repayment

Before you accept any loan offered to you, please make sure that you will be able to comfortably repay the loan without causing you or your family any hardship.

If you believe that making the sole repayment on a payday loan would prevent you from paying other important bills (like your mortgage, household bills, and so on), please do not take one out.

Do payday loan providers do a credit check?

Yes. In order to be able to legally offer instant payday loans in the UK, lenders must be authorised and regulated by the Financial Conduct Authority (FCA). And the FCA requires that a credit check is performed as part of a lender's complete application process.

There are two types of credit check - hard and soft. Later in this article, we'll explain how and when lenders use credit checking during your application.

How can I get an instant payday loan?

What information do you need to submit to a lender when you apply for an instant payday loan?

In addition to your contact details (mobile phone number and email address), you should have the following particulars to hand before you apply for ANY loan...

Information on your income

Instant payday lenders will ask you the following questions about the money you earn as part of their affordability assessment:

  • employment status (full time, part time, and so on)
  • your employer's name
  • their line of business
  • your job title
  • time in your current job
  • how often you get paid
  • your next pay date, and
  • your monthly take home pay (after tax, national insurance, and so on).

2. Information on what you spend per month

Lenders also want to know how much of your monthly earnings you spend and on what. They'll require you to answer the following questions:

  • whether you own your home or rent it (and how long you've been there)
  • mortgage/rent payments
  • existing loan repayments
  • utility bills (gas and electricity)
  • transport costs
  • food costs
  • all your other monthly expense commitments

3. Your bank account details

Payday loan customers need to provide their bank account number and sort code when they make their application.

You'll also need to have a valid UK debit card linked to your bank account to be eligible for an instant payday loan.

Good to know

You don't have to...

  • provide a reference
  • offer security (no need to secure a loan against your home, car, or other item of value)
  • find a guarantor

...to apply for an instant payday loan.

Where can I borrow money ASAP?

You can apply either direct to a payday loan provider or via one of the many pay day loan brokers in the UK.

1. Instant payday loans direct lender

There are around 80 direct instant payday loan lenders in the UK. You can search for them on the internet and, if you want to apply online for a loan directly with one of them, all you need to do is to fill in your details on the lender's website.

Please note that, every time you submit a completed lender's loan application form, a hard credit search will be run on you.

If you apply direct for too many payday loans with different lenders in a short space of time, you may be making it more difficult for yourself to find a finance company happy to work with you. That's because, if a lender sees too many hard searches, they might think that you're not managing your money very well.

2. Instant payday loans broker

The application process is different if you choose to use a broker.

In what way? Brokers work with a panel of direct lenders. A broker's job is to use the information they know about you and about the finance companies they partner with to match the right lender to the right borrower.

Brokers make preliminary loan applications on your behalf by sending your details in turn to the lenders on their panel most likely to come back with a positive response to your application.

Each lender they contact will run a soft search on you - unlike hard searches which are visible to any lender searching your credit file, soft searches can only be seen by you.

The lenders then get back in touch with your broker in turn letting them know that either:

  • they'd be happy to consider a full online application from you or
  • your application does not meet their eligibility criteria.

All of this happens normally within just a few seconds.

You'll be automatically redirected to the website of the first lender to come back with a positive response (if your broker finds you a lender).

When you're at that lender's website, simply complete their application form.

Almost instantly, the lender will let you know whether you've been approved for a payday loan when they've got the results back from the hard credit search they've run on you.

Some borrowers prefer to use brokers because they can potentially make multiple applications to direct lenders in one go. This saves a lot of time finding different lender websites and having to give each one of them the same details over and over again.

In addition, when using a broker, only one hard credit search will be carried out and that's only if a borrower completes the lender's application form and gives their permission when they're at their website.

Are you worried about your current level of personal debt?

If you're concerned about how you're managing your debt, you may wish to speak to an expert at one of the following six debt help charities - StepChange, PayPlan, National Debtline, the Debt Advice Foundation, the Money Advice Service, and Citizens Advice.

With Little Loans you can apply for a short term loan between £100 and £5,000 with terms ranging from 3 to 36 months.

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Representative Example: Amount of credit: £1200 for 18 months at £90.46 per month. Total amount repayable of £1628.28. Interest: £428.28. Interest rate: 49.9% pa (variable). 49.9% APR Representative. We’re a fully regulated and authorised credit broker and not a lender