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Representative Example: £400 loan repayable over 39 weeks at £18.96 per week, Rate of interest 113.46% p.a fixed; Representative 498.78% APR, Total amount payable is £739.44.
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A payday loan is a small, unsecured loan that you can take over a short period of time, usually between 1-6 months. Amounts available range from £100 to £1000 usually. Payday loans have lower credit requirements and higher acceptance rates than other loans.
The name payday loan originated from its primary purpose, to help people out with a small amount of money until their next payday. So traditionally, the loan term was ranging from 2 weeks to 30 days. However, nowadays the term is used more widely, quite interchangeably with short term loans, meaning that repayment periods can be several months.
Payday loans are a type of high-cost short term credit. However, it’s only considered high-cost, because the representative annual percentage rate is high. This means, if you were to borrow the same amount under the same interest rate over a year, you would pay a high percentage of interest. However if you are taking a payday loan, because you need a quick fix that you pay back in a few months, you will find they are not as bad as their reputation. They can be a great help when you have money problems. Let’s have a closer look at what we mean by APR.
Say you are looking at an APR of 249%. This means, if you wanted to borrow £100 and pay it back in 12 months, you would need to pay £177.92 of interest on top of your £100 loan amount - under the old legislation. Since 2015 however, there is an interest cap on payday loans, meaning you will never pay more than 100% of the loan amount as interest. So, for your £100 you would pay £100 interest over a year, pay back a total of £200.
But, payday loans are designed to be taken over short periods. Say you borrow the £100 to pay it back in a month after you get paid. You would only pay £20.75 interest. You pay back a total of £120.75. That’s not too bad, right? It can be totally worth it if it helps you through emergencies and critical situations.
You select the amount, term and purpose of your loan, then proceed to fill in your information. If you are connected with a lender, and the lender has approved your loan application, you will need to sign a loan agreement electronically. Your money can be deposited into your bank account the same day, often within minutes (depending on your lender and bank). Make sure you carefully read the loan agreement, as it will detail all your monthly instalment amounts and the due dates for them. Most lenders will use continuous payment authority, ie. automatic payment collection from your bank account - with your consent, of course.
First, you need to fill an online application. This takes only a few minutes. You’ll need to provide your personal details, address, income source details, monthly expenditure details and bank details (where you want the loan deposited to).
If you’re using a broker like Loanza, after hitting submit, you will be connected to a lender and taken to their site to finish the application. You will need to read the loan agreement that details your loan amount, repayment period, installment amounts and due dates. You confirm your request if you’re happy with the offer.
Your loan will be deposited into the bank account you specified. This can happen within minutes, depending on your bank and lender.
To qualify for a payday loan in the UK, there are only a few basic requirements. You have to be at least 18 years old, you need to be a UK resident (have a UK address), and you need to have a UK bank account.
Payday loans online are increasingly available. You can fill in a form with all your details online, e-sign paperwork with your pay day loans direct lender, and get the money deposited into your account. No need to leave your home. With Loanza, getting a pay loan is fast and simple.
There are a few reasons this could be.
First of all, the most important thing is affordability. When you fill a form, you will give details about your income source, amount and your average monthly expenditure. It is very important to be truthful about these details, for your own benefit. Direct lenders want to see you have a regular income and may carry out checks to verify this. If you don’t have a stable income, or they cannot verify it, they will refuse your request. They need to know you would be able to repay your loan. Another key aspect of affordability is the number of ongoing credit commitments you already have. If you already have multiple loans that you’re repaying, you are likely to be declined. Lenders don’t want to be irresponsible and add to your already significant financial commitments.
The other aspect, as you may be aware, is your credit score and report. The score itself is not so much of an issue, but if you are for instance in any debt management plan (e.g. IVAs), or have recent accounts of missed payments or defaulted credit on your report, you may be rejected. Lenders could see these as a sign that you are likely to have issues making your loan repayments on time to them as well, so they’ll reject your request.
Absolutely. As discussed above, what’s more important is affordability. Many lenders are now offering specifically bad credit payday loans, for people who need instant cash but have a bad credit score. Interest rates may be higher than usual for non-bad-credit loans, but they are an available solution for those in need of credit. Loanza has multiple bad credit payday loan direct lenders on its panel, who won’t make decisions based on credit history, only on affordability.
The process to get payday loans with bad credit is the same as for getting a non bad credit payday loan. With Loanza, you won’t feel the difference. We search our lenders and based on your details, we will connect you with one of the lenders on our panel. We have many lenders offering bad credit payday loans, so your chances of approval are good, especially if you have a steady income source.
When you apply via a broker, like Loanza, you only go through a soft search. There is no hard credit check. Based on your details you’ll get connected with a direct lender who is most likely to lend to you. If you decide to confirm your request on their site, however, they are required by law to carry out a credit check. This law applies to all loan applications. So, no credit check payday loans are a myth. Avoid any lender who says they have no credit check loans - they are trying to scam you.
However, the fact they have to carry out a credit check doesn’t mean that a direct lender for payday loans won’t lend to you if you have a bad credit rating. As we discussed above, many lenders offer payday loans for bad credit and make decisions based on affordability. Your best bet is to use a broker like Loanza, be truthful about your information, and get connected to a lender who will most likely accept your request. This way you avoid multiple hard credit checks that would happen if you tried going from lender to lender.
You can get a payday loan bad credit through Loanza. We have over 50 direct lenders on our panel, many of which offer bad credit payday loans. Fill in our fast and simple online form, and get connected to a pay day loan direct lender in a matter of minutes.
Payday loans are designed to help you out in emergencies. Emergencies could include for instance car or appliance repairs, groceries or bills. It’s better to avoid late payment on bills as they come with high fees and a damage to your credit score. In reality, payday loans can be used for anything, but you should avoid using it for frivolous spending, such as unnecessary products or services, luxuries, holidays and so on. Use them only when you really need to.
Payday loans' repayment terms are usually between 1-6 months, but in some cases they could extend to over a year. Direct payday loans lenders will present your exact repayment terms in your loan agreement that you sign. Try to pay loans according to the agreed terms. If you have issues with repayment, you can always contact your lender and ask for some flexibility of your loan terms. Do this as soon as you find out you won’t be able to make the repayment date, to avoid late payment.
There are a good number of UK payday loans direct lenders. At Loanza, we have over 50 of them on our lending panel. The easiest way for you to find a lender who would lend to you is by using Loanza’s 100% free service. You’re in the right place!
You’re better off going through a broker when applying for a payday loan, because brokers only do a soft search on your file, and they will connect you with a direct lender who will most likely accept your loan request. This way, you avoid having multiple hard checks on your report you would get if you went from lender to lender - as direct lenders are required by law to perform one hard check.
Payday loans don’t have the best reputation, but with anything, the secret is careful consideration and balance. If you don’t use payday loans excessively, then they are actually a good option to have when you end up in an emergency needing fast cash.
The question is not whether payday loans are bad, but rather, whether they are right for you. If you know you will be able to afford the repayments, you need instant money to help with something urgent that came up, then they can be of great benefit to you.
If you make your repayments on time, payday loans are unlikely to have an effect on your credit score. Of course, as with any other credit, if you miss payments, then lenders will report this to credit reference agencies, which could damage your score. Also, every credit application will leave a hard check on your report. One check on your file shouldn’t be harmful, but if you go around applying, multiple checks in a short period will bring your score down. It shows you are not in control of your finances, and will make it that much harder for you to borrow.
However, if managed well, payday loans, similarly to other loan products, could have a positive impact on your score. If you repay your installments full and on schedule, it shows you are responsible with your financial commitments. But, if you’re looking to improve your credit score, there are better options.
Be careful, don’t take payday loans for unnecessary purchases, don’t take them too often, and use a broker, like Loanza, to make an application to multiple lenders all at once, with only one credit check on your report.
A soft search, - one carried out by Loanza and other brokers - even though it doesn’t affect your credit score, will show on your credit file. A hard credit check for any loan will stay on your report for 12 months, visible to other lenders. Missed or late payments however, as with every other loan, will stay on your report for 6 years. Make sure you contact your lender if you’re experiencing difficulties making your repayments before you end up with a late payment on your file.
Payday loans are different from other loans because they are offering small amounts over short periods, mainly to cover for financial emergencies. They have a much simpler and faster application and approval process. They have higher interest rates. They are available for people with poor or no credit history.
Most lenders allow you to repay your payday loans early with no early-exit charges. However, it’s best to check with your lender to make sure they don’t have any associated fees for paying off your loan early.
If you realise you won’t be able to make your loan repayments, contact your lender immediately.
As they normally take repayments automatically from your account, if they find there’s not enough money on your account for the full payment, they will keep trying to collect payments every day until the amount is cleared. If you don’t contact them, you will get late payment charges in most cases. The payday loan will continue to accumulate interest. Late payment will also have a bad effect on your credit score.
If you do have enough money on your account, but then would end up being short on money to pay your bills or other essentials, you should again, contact your lender.
Every payday loans direct lender Loanza works with is regulated, and as such, they have to be sympathetic toward customers facing financial difficulty. They have to work with you on a new repayment plan and freeze interest and extra fees for that agreed period.