What are Local Payday loans?
local Payday loans refer to borrowing up to £2,500 from an online lender and repaying on your next pay date. The money is transferred to your bank account in one lump sum and the borrower must repay the loan amount and interest when their salary next goes into their account, usually the last Friday of the month.
Depending on the lender, first time customers can borrow up to £500 but once you have repaid a loan successfully, you can borrow as much as £2,500, depending on the lender. The amount you can borrow will depend on a number of factors including your credit history, income and the lender’s criteria.
Since the loan will be repaid on your next pay date, a typical payday loan will last 7, 14 or 21 days but some lenders will allow you to repay up to 45 days later or repay over 3,6 or 12 months in instalments.
Repayments are made automatically by the lender on each pay date using a process known as Continuous Payment Authority. This allows lenders to collect repayments from your debit card in one smooth transaction so you don’t have to worry about making a manual payment on your pay date.
To apply, simply click on one of our featured lenders in the table above. This will take you directly through to their website where you will be asked to fill in the application and if successful, the funds will usually be transferred to your bank account on the same day.
We are a direct affiliate of the companies we feature and we are passionate about working with direct lenders only. We do not take any of your details and sell them onto any other companies and our service is completely free to use.
What is the criteria for applying?
The criteria for payday loans will vary between lenders but the general requirements are as follows:
UK resident
Over 18 years of age
Working debit account
Working mobile phone and email account
Full time or part time employed with minimum take-home of £500 pm
An online application will only take around 5 minutes to complete and once you have filled in all your details, the lenders will carry out a series of a checks to see if you are eligible for a loan.
Most lenders require a certain credit score or affordability prior to approving a loan. You may be required to confirm some details over the phone and verify your employment by providing a copy of your pay-slip or bank statement. By checking your salary, the lender can match up how much you wish to borrow with what you can afford to repay and therefore find the best loan product for you.
Although a minimum credit score and level of affordability is required, there are also lenders who offer bad credit payday loans and for those people on benefits.
If you application has been successful, the funds can usually be transferred to your debit account electronically within one hour, one day or 48 hours.
What are the reasons for taking out a payday loan?
Payday loans are typically used for short-term emergency expenses. So if you have a broken down car, an expensive medical bill or a boiler on the brink but you don’t have enough money that month to cover the cost, the idea is that the loan will help tide you over until payday. So when you next receive your income from work, you can repay your loan and be in a better financial position.
When you need money because of something urgent, you need the money fast so you can understand why borrowers in the UK look for payday loans online where you can receive funds within the hour.
It is best to have money saved away for a ‘rainy day’ and this usually involves having around 3 to 6 months of your salary saved in a bank account or a safe place and only using it for emergency purposes.
However, we appreciate it is not always easy to save money and especially when you have an emergency which comes from out the blue, you sometimes need a little extra finance to help you through the month. With Quiddi Compare, you can assess your options and compare the different rates offered by lenders and for how long, allowing you to make an informed decision on your loan.
Why is it important to compare payday loans?
Borrowers can save a lot of money if they compare payday loans effectively. This is because all payday lenders have different rates of interest and terms of the loans that they offer.
Recent studies carried out by the Competition Market Authority showed would typically apply with the same lender over and over not realizing that there are cheaper alternatives available. By finding a cheaper payday loan, the average customer could save over £100 a year. Source: Gov.uk
Payday lenders offer their rates in the form of APR and this refers to the Annual Percentage Rate. It might be confusing that the percentage is in the thousands but this is because APR is based on the payday loan as if it were taken out for an entire year and therefore has been multiplied. APR is the consistent measure of interest of all loan and financial product so it serves as a useful comparison tool.
Other ways to compare payday loans involves looking at the daily interest rate that has been capped at 0.8% per day or the cost per £100 that has been capped at £124. Please also use the repayment examples we have provided to give you a better idea of what you would repay. Any repayment example below this price cap suggests a very competitive rate. You can read more here about understanding the costs of payday loans.
When using a payday loan comparison tool like ours, you should be able to find a lender that suits what you are looking for – whether you want to repay over a longer period of time or if you need to find a lender that can transfer funds immediately.
The best payday loan lenders are those that carry out affordability and credit checks, handle your data securely and allow you to repay your loan early. So if you decide that you have the funds earlier than your pay date and are ready to repay sooner, you have the flexibility to do so and save money in the process. This is because you will only be charged the daily interest that you have accumulated up to that point. To give an example, if you have a 30 day loan and decide to pay after 20 days, you will only pay 20 days worth of interest and therefore not have to pay the full amount.
Using a comparison site, you may also find new payday lenders that have just entered the market and offer more competitive rates. We are always looking to feature new lenders and partners on our website so they can offer competitive rates for our customers.
What if my application is not successful?
If your application with one of our chosen lenders is not successful, your details will not be sold on to any other third party companies and no fees will be deducted from your account.
Borrowers must be vary of applying with too many lenders because every time you do, the company will run a credit check and this will leave a footprint on your credit file for around 12 months.
So if you make too many applications in a short space of time, it will negatively impact your credit rating and show other lenders that you are in desperate need of cash.
When applying, always provide accurate and correct information, as you may be required to prove things like employment status and income later on.
What happens if you cannot repay?
If you cannot make your loan repayment on time, there is usually a one-off default fee charged by the lender which is a maximum of £15. In addition, a mark will be left on your credit file stating that you have missed repayment – so this could affect your ability to access credit in the future.
Lenders are required to offer forbearance and flexibility so always get in touch quickly if you know that you are not going to be able to repay on time. Several of the good companies we deal with will allow you delay your repayment or set up an arrangement to pay lower amounts without damaging your credit score. Read here for more information.
Some vendors will offer rollovers whereby your extend your loan, but this can get expensive very quickly so only pursue this if you have considered how you are going to pay off the debt.
Payday loans can be an expensive form of finance and should only be taken out for genuine emergencies and not to fund a material lifestyle. Borrowers should always consider how they are going to repay their loan before applying.
What payday loan alternatives are available?
There are several alternatives available where you can borrow up to £2,500. Whilst these may seem cheaper, they may require you to put something down as collateral or you may have to wait longer to receive your funds.
One of the smartest and most affordable alternatives to payday loans is borrowing from a credit union. With a typical APR of 26.8%, these not-for-profit organizations allow you to borrow a few hundred pounds at low rates. However, to be eligible to borrow from your local credit union, you must have a job in the public sector such as teacher, nurse or policeman. Also, the funds may take between 1-2 weeks to be transferred to your account.
Guarantor loans allow you to borrow up to £7,500 for as long as 5 years provided that you have an extra person involved in the transaction to act as your ‘guarantor.’ This person is likely to be a close family member, colleague or friend and they will agree to cover the cost of your loan if you cannot. With an APR of around 49.9%, this product is ideal for those with bad credit as the borrower is able to benefit from their partner’s credit rating in order to get the funds they need.
Logbook loans enable you to release the equity from your vehicle in order to borrow money. By putting your car, van or bike down as collateral, this secured loan lets you borrow up to £50,000 and repay in monthly instalments over 3 years, but you risk the repossession of your vehicle if you are unable to keep up with repayments.
Credit cards are one of the most popular and simplest ways to borrow money. By receiving a ‘credit limit’ based on your financial circumstances, you are able to borrow a certain amount and repay the balance at end of the month – so it is like a loan because you are getting the money up front. However, you must be conscious about paying on time because the cost of going into your overdraft can be more expensive than a payday loan.
