Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk. Representative example: £400 borrowed for 30 days.
Total amount repayable is £459.36. Interest charged is £59.36, interest rate 180.5% (variable). Representative 728.9% APR.
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In the UK, payday loans have been around for a number of years now. Millions of people have accessed essential finance through them and many people are happy to use them on a regular basis. However, there can be a significant amount of negative press about payday loans. Whilst a small amount of this may be justified in relation to a minority of companies that drag the industry’s name down, the fact is the financial services industry in the UK is highly regulated and payday loans are a legitimate and popular loan product for many people across the country.
To help you get a better idea of what payday loans are really about, how they can be useful and why they are so popular, we take a look at 5 of the biggest myths about payday loans and present you with the facts.
Payday Loans Are Only For Poor People? Wrong!
It’s a misconception that payday loans are only there to be used by poor people. This isn’t the case and payday loans are taken out by people with modest incomes to those who may have professional jobs that pay excellent salaries. Sometimes even wealthy people have cash flow issues and need a quick injection of cash that they can pay back quickly.
Payday Loans Only Benefit Lenders? Incorrect!
Some people like to portray payday borrowers as victims because payday loans are designed only to benefit the lenders. This could not be further from the truth. Borrowers actually benefit greatly from payday loans because they offer a quick and easy to access form of credit when they are in desperate need of money. Unlike traditional loans, they don’t have waiting periods and have an open-minded attitude to lending to those with adverse credit and CCJs. The only benefits lenders get is the interest on the loan which if it is paid back on time like most payday loans is not actually as much as you might think.
Payday Loans Are Designed To Rip You Off? Untrue!
One of the biggest payday loan myths is that somehow payday loans are designed to rip you off. This is absolutely not the case. Payday loans as we mentioned earlier are highly regulated and popular financial products that are used by a wide variety of types of people. For settling emergency cash needs, they are a quick, safe and effective way of providing you with the cash that you need. And if you meet your repayment obligations, they’re not half as expensive as you may think. Payday loans only become really expensive when payments are missed or the borrower defaults. Evidence by the Citizens Advice Bureau points to how good the payday loan industry is now, there being an 86 per cent reduction in clients contacting their customer services regarding payday loans between 2013 and 2016.
Payday Loans Are Full Of Hidden Fees, Terms And Conditions? Inaccurate!
Sadly, many people still believe that payday loans are designed to trip up borrowers by adding hidden fees and making changes to the terms and conditions of the loan. This is absolutely not the case. Payday loans are highly regulated and even if a payday loan company wanted to do this, they would not be able to because of UK law. Payday loan providers are like any other business. They want to provide the best service to their customers and will do everything in their power to make this so.
Payday Loans Companies Are Loan Sharks? False!
Getting a payday loan is certainly nothing like getting a loan from a loan shark! Payday loans are offered by highly reputable lenders who are authorised and regulated by the Financial Conduct Authority (FCA). Everything is done within the stringent rules set down in UK law and when taking out a payday loan with a reputable company, borrowers can do so with confidence knowing that they are protected by the full weight of the law.