Category Archives: Payday Loans

Payday Loans vs. Overdrafts, Pawnbrokers and Loan Sharks


There is a reason why payday loans are the most popular forms of short-term loans in the UK. The loans have very many benefits over competing sources of short-term cash like overdrafts, pawnbrokers and loan sharks.

Definition of overdrafts, pawnbrokers and loan sharks

· Overdrafts are short-term sources of cash provided to bank account holders by banks. Overdrafts reflect as deficits in bank accounts. They allow account holders to overdraw money.

· Pawnbrokers are persons who lend money at an interest based on the value of the article pawned.

· Loan sharks are lenders who charge high interest rates usually under illegal conditions
Below is a detailed discussion highlighting the top benefits of payday loans over pawnbrokers, overdrafts and loan sharks.

1. Payday loans are extremely easy to get: Payday loans have very little restrictions. You don’t need any security as is the case when getting short term loans from loan sharks and pawnbrokers. Also, you don’t require any credit history with any bank to get a payday loan as is the case with overdrafts. All you need is a job and a bank account. Also, payday loan lenders don’t require a credit score or history as is the case with banks and overdrafts. Payday loans are easily accessible to just about anyone you can think of who has a job or steady income.

2. Flexible borrowing limits: Payday loans are also better sources of short-term cash compared to overdrafts and loans from pawnbrokers and loan sharks because you can borrow as little or as much as you want. It is possible to borrow a few pounds to a few thousand pounds from any payday loan lender provided you are capable of repaying. Pawnbrokers and loan sharks limit your loan amount to the security you provide making it impossible to borrow if you don’t have valuable items like jewelry, cars, etc. Banks also limit overdraft limits depending on factors like cash flow.

3. Online application Payday loans in the UK are acquired online. Although there are some traditional payday loan lenders, most people take payday loans online which is fast, easy and convenient. Loans acquired from pawnbrokers and loan sharks must be acquired physically through tedious and time-consuming processes.

4. Fast processing: It is possible to get a payday loan within a few minutes after your loan application has been approved. Overdrafts take more time to be approved especially when they are being taken for the first time. The same applies to loans from loan sharks and pawnbrokers. The security must be assessed before a loan can be disbursed. The process of getting a loan from a pawnbroker or loan shark also involves lengthy negotiations.

5. Payday loans are highly regulated: The FCA regulates the payday loan industry in the UK. There is very little to no regulation governing pawnbrokers and loan sharks. In fact, most loan sharks and pawnbrokers operate illegally. Borrowers are usually exploited and coerced for repayments. Banks also charge high interests for overdraft facilities. On the other hand, the FCA limits the maximum amount of interest payday loan borrowers are supposed to pay. You will never pay more than you borrow in interest rate payments and fees if you borrow from a payday loan lender. The FCA has also put a cap on the interest rate charges at 0.8 percent per day. Payday loans are therefore the best sources of short term cash for borrowers in dire need of cash.


In case you need a fast, reliable and safe source of short term loans, payday loans are your best option over bank overdrafts or other sources of short-term cash like borrowing from pawnbrokers or loan sharks. Payday loans are easy to get, flexible, highly regulated, automated and cheaper. Competing sources of short term loans don’t offer such benefits.

Swiftmoney is one of the best payday loan lenders in the UK. We offer the best APR, repayment terms, most flexible borrowing limits.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Top UK Payday Loan Companies in the UK

There are hundreds of payday loan lenders in the UK, however, very few standout. We’re going to attempt ranking the best lenders based on factors such as Rep APR, borrowing limits, early repayment, FCA approval among other factors.

1. Swift Money (APR: 1255.66%)

Swift Money tops the list of top payday loan companies in the UK based on many factors the most notable being APR (1255.66%) which is one of the lowest (if not the lowest) in the industry. Swift Money also boasts of having one of the best approval rates (97.5%), best payday loan approval time (have money in your account in a record 10 minutes), unmatched borrowing flexibility (borrow from as little as £50 to £1,000+), 24/7 access (apply for a payday loan anytime), efficient services (over 400,000 loan applications processed since 2011) and no restrictions.

Swift Money also has one of the most secure payday loan websites in the UK (Data protection: ZA069965, Valid certificate, Secure TLS connection and guaranteed resources security). Swift Money is also fully authorised and regulated by the FCA (Registration number: 738569). Swift Money Ltd. Is a fully registered company England and Wales. The company clearly stands out in all aspects.

2. Mr Lender (APR: 1,248.5%)

Mr Lender is a UK payday loan lender market leader in regards to reviews. The company has over 15,000 5-star customer reviews. The company is currently the best short term loan provider in the UK according to the 2016 Consumer Credit Awards. Reviews aside, Mr Lender offers flexible borrowing limits (£200 to £1000 as well as flexible repayment terms (repay your short term loan for up to 6 months). Other notable advantages include; the company doesn’t charge any upfront or no late fees. The company is also authorised and regulated by the FCA (Reference no: 673310).

3. Lending Stream (APR: 1272.0%)

Lending stream stands out for having good limits (borrow up to £1500), flexible payments (up to 6 months), great reviews (Lending Stream has 4.8 stars rating out of 5 based on 5,460 reviews). Lending Stream’s customers praise the lender for having fast, efficient and affordable loans. The company also stands out for its impressive processing speeds. Lending Stream understands that people need short term loans as fast as possible which is why funds are deposited in customers’ bank accounts in approximately 15 minutes after applications have been approved. Lending Stream LLC is also a fully licensed company with FCA authorisation (Registration number: 689378). The company also takes security and privacy very seriously (Data protection registration: No; Z2752028).

4. Quickquid (APR: 1294.1%)

Quickquid is one of the most trusted online lenders in the UK. The company has served over 1 million British citizens to date helping them take care of unexpected expenses comfortably. The company has a maximum credit limit of £1,000 for new clients and £1,500 for existing clients. Most loans are processed within 30 minutes. The company is fully authorised and regulated by the FCA (Registration number: 673738). Quickquid also observes the highest levels of data security according to the Data Protection Act of 1998. The firm has an APR of 1294.1%.

5. Wageday Advance (APR: 1294.1%)

Wageday Advance is an FCA-authorised payday loan lender (Reference no: 672831) renowned for offering flexible short term loans ranging from £80 to £1,000 and featuring repayments suitable to borrowers (up to 6 months) with no default charges and no early repayment charges. Wageday Advance payday loans are approved and dispersed fast (within an hour of application) and the company has a team of dedicated customer support staff ready to assist you in any way. Wageday Advance also takes data protection very seriously (Reg No: Z1687106).

6. Sunny (APR: 1,299.0%)

Sunny stand out mostly because of lending flexibility. Clients can borrow from £100 to £2,500 even more (for existing clients). The company offers some of the most flexible lending limits in the industry. Sunny loans are also fast (processed within 15 minutes) and borrowers enjoy flexible repayments, no application, admin and late fees. Borrowers also have the freedom to repay their loan early without being charged anything. Sunny loans also have excellent reviews (9/10 after 1,307 reviews on Trustpilot). Sunny loans also come with resources to help clients financially i.e. money management guides. The company operates under Elevate Credit International Limited, a company which is fully registered (Company no: 05041905).

7. Wonga (APR: 1,509%)

Wonga is UK’s largest payday loan lender by market share (the company controls 30% of UK’s payday loan industry. The company, however, charges one of the highest APRs. New customers also have lower borrowing limits £50 to £400 however, existing customers can borrow up to £1,000. Wonga payday loans stand out in many other aspects i.e. fast approval (approximately 5 minutes), automated services and no transfer fees. Wonga is also fully authorised by the FCA (FCA Registration number: 671454 under trading name WDFC UK Ltd).
The lender is definitely one of the best although there are better alternatives in this list like Swift Money which has longer loan durations i.e. up to 6 months instead of Wonga’s 34-day loan duration limit. Swift Money also offers installment payments. Wonga doesn’t.


8. Safety Net Credit (Variable APR)

Safety Net Credit makes it to this list for being one of the few UK payday loan companies that offers payday loans with no minimum/maximum repayment terms. This makes Safety Net Credit’s short term loans unmatched in terms of repayment flexibility. Furthermore, the company has great online loan management tools that allow customers to apply for loans seamlessly and monitor their accounts, access their credit worthiness and so much more at any given time. Safety Net Credit also has flexible borrowing limits ranging £100 – £500 and increase with time-based on factors like a customer’s affordability, income, credit history, etc. The company is also authorised and regulated by the FCA (Reference no: 715525). Due to the companies repayment terms, the APR ranges but stays within limits set by the FCA.

9. Ferratum (Variable APR)

Ferratum also qualifies as one of the top UK payday loan companies. The company has a global presence (provides short term loans in 22 countries globally) and one of the fastest online application platforms. Customers can complete applications in a record 2 minutes. The company also has flexible borrowing limits for all its short term loans (i.e. £50 to £1000 for new customers, high limits for existing customers). Customers can also repay their loans in 1 to 6 months with no early repayment penalties. Ferratum is fully authorised and regulated by the FCA (Reference no: 672537).

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

How to Calculate the Real Cost of Your Payday Loan


The FCA recently put caps on the maximum interest rate chargeable per day for payday loans at 0.8%. The FCA also put caps on the maximum amount of fees and charges at 100% meaning that you can never pay more than you borrowed in interest and fees. Although this puts an end to unfair lending practices that were common in the past, this doesn’t mean that every payday loan you come across going forward will be cheap. Far from it! There are still payday loan lenders that are more expensive than others so, here’s how to determine the real cost of a payday loan

Understand the structure of payday loans first

To be able to find out the real cost of a payday loan, you need to understand how payday loans are structured. Payday loans are short term loans that are meant to be paid off during the next pay day i.e. in a month or less. As a result, they feature shorter terms and lower loan amounts than typical loans. They, however, have more fees than typical loans.


The interest charges usually denoted as APR look at the interest that a borrower would pay in a year divided by the principal balance. For instance, if you are borrowing $1000 and you are supposed to pay $10 in interest per month for a year (12 months), the APR for the loan will be 12% i.e. 120 divided by 1000. The most important thing to note is payday loan lenders calculate interest daily even though they denote it as APR. Interest, therefore, add up faster than typical rates so do independent calculations.

The total amount of interest you should expect to pay = Annual interest rate/365 days x term of the loan in days x loan amount.

It’s also worth noting that the payday loan interest you pay depends on the loan amount as well as the term of the loan. You tend to pay a higher interest rate if you borrow a larger amount and stay with the loan longer than usual (i.e. more than a month) because interest is charged daily.


Since payday loans are usually offered over short time periods, payday lenders can’t make as much money unless the loan is repaid over a long period. As a result, payday lenders focus on making money on fees.

Different lenders may have different fees . However, you should look out for establishment fees and monthly fees among other fees that are a fraction of the principal amount borrowed since such fees tend to be the most costly.

You also need to consider other fees like default and fees. Such fees are usually charged when you miss a payment, so it’s important to know how much you stand to pay in the worst case scenario. Default fees are charged when you default on your payday loan. The fees can include an amount that is continuously charged until you are able to repay your loan. There is, however, a cap set by the FCA.

The total amount of fees and interest charges you pay on your payday loan in the UK can never exceed the loan amount you received. This cap is effective for small amounts. If you have borrowed large amounts, you will definitely pay a lot in interest and default fees. This explains why you need to know exactly what you stand to pay will charge you.
Enforcement expenses are fees incurred by a lender as they pursue you to pay your defaulted loan. The fees may include things like lawyer/court expenses.
Some lenders may also have an early repayment fee to discourage payday loan borrowers from repaying their loans too early i.e. after a day. To get the real cost of your payday loan, you must add up all these fees.

The real cost of your payday loan equals the interest charges plus all the fees applicable. Most borrowers usually pay attention to the interest rate figure and assume charges can’t be much. This shouldn’t be the case. The only way to find out the actual cost of your loan is to add up all the fees.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Types of Payday Loans Available in the UK

There are very many types of payday loans in the UK most of which are classified by their features, how you get them as well as factors such as who is issuing them. Below is a brief discussion of the most common types of payday loans in the UK. 

Wonga loans

Wonga loans are payday loans issued by UK payday loan giant Wonga which enjoys a 30 to 40% market share of the entire UK payday loan industry. Wonga payday loans are among the oldest in the UK having been introduced in 2006. The payday loans are popular in the UK although they have spread to other countries. Wonga loans are available in £50 to £400 amounts. The loans are disbursed 5 minutes after approval. The loans come with a representative APR of 1,509%.

Online payday loans

As the name suggests, online payday loans are loans which can be applied and issued online. These types of payday loans are the most convenient because you don’t have to visit a payday loan lender physically to get them. Everything is done online from application to processing and disbursement of funds. All you need to do is go to the lender’s website and follow their instructions. The convenience of online payday loans has made them very popular today. Borrowers are however advised to deal with authorised online payday loan lenders only to avoid being scammed. You should choose a reputable lender like Swiftmoney with FCA authorisation and a secure website.

Bad credit payday loans

As the name suggests, these are payday loans offered to individuals with bad credit. Although most payday lenders in the UK lend to anyone provided you are employed or have a regular income, some lenders don’t advance loans to individuals with bad credit. Bad credit payday loans cater for such individuals. You don’t require good credit to get a bad credit payday loan. In fact, lenders don’t ask you for your credit score or rating. You just need to fill in your application correctly to qualify. The loans may, however, come with higher interest rates than usual because of obvious reasons i.e. individuals with bad credit are high-risk borrowers. It is, however, possible to get cheap bad credit payday loans.Swiftmoney offers bad credit payday loans at great rates. 

Instant payday loans

These types of payday loans are offered instantly. They may be offered online or offline depending on the lender. Instant payday loans appeal to borrowers who want to borrow as soon as possible. If you don’t any time to spare, an instant payday loan will be great for you. The main difference between this type of payday loans and others is the time it takes to process applications and disburse payments. Instant payday loans offered online are the fastest types available today because borrowers apply online and receive money within minutes. 

1-hour payday loans

Unlike instant payday loans, you have to wait for an hour to receive your loan amount. If you have some time to spare, you can apply for a 1-hour payday loan instead of an instant payday loan. You stand to enjoy some interest savings when you reduce the urgency to receive your loan amount. 

Same day payday loans

These types of payday loans are issued the same day. If you are in a hurry but you can afford to wait a few hours to get your payday loan, same day payday loans will be ideal for you. A typical same day payday loan takes a day to be processed and approved. Money is also sent the same day. The loans come at a slightly lower interest rate compared to instant payday loans because they aren’t as urgent. 

No fax payday loans

No fax payday loans are payday loans that don’t require you to fax or mail anything to the lender. Most online payday loans are no fax payday loans. These types of payday loans offer unmatched convenience by handling everything online. 


The above information summarises the main types of payday loans available in the UK. After going through the above information, you shouldn’t have a problem selecting a payday loan that serves you perfectly. 
Swiftmoney offers the best types of payday loans in the UK in regards to interest, processing speed and online application processes.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

How do you decide how much you should borrow? 

Whether you are borrowing a short term loan or a long-term loan, the criteria for deciding how much you should borrow is almost the same. It’s important to follow the criteria lenders use since they ultimately decide how much you can borrow. One of the most important factors lenders consider (and you should consider too) is affordability. To calculate affordability, you need to consider your income and factors such as debt expenses and the size of your down payment (if applicable). Below is a discussion on how to decide the amount of money you should borrow.
What is your debt-to-income ratio?

Your debt-to-income ratio is the percentage of your income you spend on repaying debts like credit card payments, an auto loan, student loan, mortgage, etc. Your debt-to-income ratio shows how much money you spend monthly repaying your debts. If you earn £6,000 every month and pay debts amounting to £2,000 every month, your debt-to-income ratio is 0.33 (33%). 

Lenders have different requirements depending on the type of loan you want. For long term loans, most lenders require all your debt commitments to be 0.36 or 36% or less. The ratio can, however, vary from one lender to another depending on type of loan, term of the loan etc. Short term loans like payday loans have more flexible debt-to-income ratio requirements because they involve small amounts paid over a short period. 

If you earn £6,000 for instance and you have existing debt commitments amounting to £1,000, you shouldn’t borrow more than £1,160 so that your debt-to-income ratio is 36% or less. In this example, your total debt will be £2,160 against an income of £6,000 which is within the recommended (0.36 or 36%) threshold. It is also important to note that you don’t have to borrow more than you need. The debt-to-income ratio helps borrowers determine the most affordable loan amount.

What is your credit history?

Lenders also consider a borrower’s credit history when deciding what they should lend their customers. If you have a good credit history, you will be able to borrow more than usual at a lower interest rate. This shouldn’t, however, be taken to mean that you should borrow more than you need. A good credit history will simply give you leeway if you want to borrow more. If you can afford a bigger loan comfortably, you can use your good credit history to your advantage otherwise, don’t take a loan you can’t afford even if your credit history is good (700 or higher).
How much do you need?

Your debt-to-income ratio should give you a rough idea of how much money you can afford to borrow comfortably. Your needs should help you come up with an exact figure. Using our above example, if you can borrow £1,160 comfortably, but you need a £500 loan, don’t borrow more than what you need. Loans especially short term loans like payday loans should be used to cater for unavoidable expenses, not luxuries. Unless you are planning on investing the additional amount, stick to what you need to avoid servicing unnecessary expenditure.

Do you have a down payment?

You should consider down payment when you are taking long term loans like a mortgage. A large down payment allows you to borrow more and vice versa. It’s always better to pay more substantial down payment because you also reduce your repayments and get better interest rate deals compared to someone who pays the minimum down payment. If you don’t have a large down payment, borrow modestly because you have little leverage to negotiate better terms.

Consider lifestyle factors

Your lifestyle should also come into consideration when you are deciding how much you should borrow. Although the debt-to-income ratio is a perfect place to start, you need to consider how the new loan will affect your lifestyle. For instance, when taking up a mortgage to buy a house in a city with poor public transport, you might have to factor in additional transport costs. You might also need to spend additional money moving your children to nearby schools. Lenders don’t account for such factors, so it’s important to consider them yourself. Considering lifestyle factors helps you determine with certainty how much you should borrow and if it is affordable.

There are a lot of factors you need to consider when you are deciding how much you should borrow. The most important factors revolve around affordability. You should never take up a loan you can’t afford to pay comfortably. Luckily, the above factors are adequate to help you do just that.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Getting Your Payday Loan Application Approved

Although payday loans are available to almost anyone, even those individuals with bad credit, you aren’t assured that your payday loan application will be approved if you apply. You can increase your chances of your payday loan being approved by choosing lenders with a high approval rate (Swift Money has a 97.5% approval rate, one of the highest in the UK payday loan industry), however, you still aren’t guaranteed of an approval. So, what can you do to increase your chances especially today when payday loan lenders have become stricter due to tightening regulation? 

Shop around first

Before you apply for a payday loan, make sure you shop around first and see what other lenders are offering. It’s also important to ensure you meet the requirements and criteria. Applying for a loan can have a negative effect on your credit rating if you apply for a loan you aren’t qualified for. It is, therefore, important to shop around and see which lenders are willing to lend you. You can use payday loan comparison websites to help you shop around for the best payday loan deals for you. Shopping around ensures you don’t waste time and damage your credit rating further applying for payday loans you can’t get. 

Find a payday loan lender who lends individuals with a credit score/rating like yours
Although most payday lenders don’t consider credit scores when approving loans, a bad credit score increases the chances of your application being declined. Furthermore, not all UK payday loan lenders offer payday loans to individuals with bad credit so you shouldn’t assume anything. If you already have a bad score and you are in dire need of a short term loan, you won’t have the time to improve your score. This is precisely why you need to find a lender who is a bit lenient with your kind of scores. You must, however, seek payday loans for bad credit from reputable lenders only since most lenders offering loans to individuals with bad credit tend to be loan sharks who charge exorbitant fees and coerce their clients for collections. Some even operate illegally without a license or FCA authorisation, so you need to be very careful. 

Make sure you meet the basic criteria for getting payday loans in the UK

Payday loan lenders are most interested in your ability to repay your loan. As a result, they focus on non-payment risks first. Almost all UK payday loan lenders lend to employed individuals only since such individuals are assured of a monthly salary (a payday). Lenders will also look at other requirements i.e. age. You have to be 18 years and above to qualify for a payday loan in the UK. You also need to be a UK resident with a UK bank account. Some payday loan lenders may still offer you a payday loan even if you are unemployed provided you have a guarantor. You must, however, investigate in advance and make sure you meet the basic criteria if you want to get your payday loan approved. 

Also, ensure you meet the affordability criteria

Sometimes being employed may not be enough to guarantee you a payday loan in the UK. You need to be in a position to afford the loan. Payday lenders assess a person’s net income after expenses before they approve applications. Ideally, you should have enough money to meet your loan repayment obligations as well as your other monthly expenses. Although the affordability criteria varies from one lender to another, your loan shouldn’t take up more than 10-20% of your net income. 

Don’t lie or provide inaccurate information in your application

Applications with false or inaccurate information are declined instantly so you must make sure you submit correct/accurate information if you want your application to be approved. You can start by checking your credit file to ensure the recorded information is correct. Any mistakes on a borrower’s credit file can affect their application. It takes approximately two months for a credit file to be updated so it’s important to check your file in advance. Never lie in your application. There are high chances of your lender finding out and informing other lenders making it almost impossible for you to ever get a payday loan in the future. If you’re not sure what information is in your credit file, make a point of checking.

Fill your application conclusively

Most payday loan lenders in the UK allow online applications. You must complete all the required fields in your application to make it extremely easy for your application to pass identity, credit as well as fraud checks. Failing to complete your application raises unnecessary red flags reducing your chances of getting your loan approved even in cases where you have provided accurate information. 


If you want your payday loan to be approved, you must know what payday loan companies look for in an application. First and foremost, an application must meet the basic criteria i.e. employment status, age, UK residency/citizenship/bank account, credit score, affordability, etc. The application also needs to be completed fully with accurate information. You also need to make sure you choose a payday lender that is most likely to accept your application which means you must shop around.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Why Payday Loans are Here to Stay

The current state of the UK payday loan industry

Today may not be the best time for payday loan lenders in the UK given the recent FCA actions to streamline the industry. However, experts argue that payday loans are here to stay.
The FCA recently capped the maximum interest charges at 0.8% a day and the escalating debt at not more than 100% to ensure the total cost of interest and applicable fees never exceeds the initial amount borrowed. Payday lenders like have also been reprimanded for unfair lending practices.

These measures have been welcomed in an effort to help end bad lending practices that have been affecting the payday loan industry for years.
According to the Ombudsman, although the number of complaints about the industry seem to be increasing, the increase is because of the ongoing compensation as well as borrowers being more informed about their rights. Furthermore, most of the complaints the Ombudsman is handling include complaints about banks, insurers, and other financial institutions and not just payday loan lenders.

As a result, the current notion that the payday industry in the UK is falling apart isn’t accurate. Although many payday lenders are expected to go out of business, payday loans will still remain in high demand. So, why are payday loans here to stay again?

The FCA is taking the necessary action

The FCA has assured UK payday loan borrowers that unfair lending practices will no longer be tolerated. For instance, the FCA has made sure that payday loan debts never spiral out of control again even in cases where borrowers default for a prolonged period. Your loan fees and interest can never exceed the loan amount going forward.
Although this rule has seen may payday lenders go out of business, the demand for payday loans is still very high. According to the Consumer Finance Association, a group which represents payday loan lenders like The Money Shop, QuickQuid, and Peachy, the demand for payday loans won’t disappear despite the current measures. According to the Consumer Finance Association Chief Executive, Russell Hamblin-Boone, people may start getting payday loans from fewer lenders, however, the payday loan demand and debt levels won’t change significantly.
The FCA’s actions have increased the confidence borrowers have in the industry, and this can only make the industry stronger.

There are no serious alternatives to payday loans yet

Payday loans are also here to stay because their position hasn’t been threatened yet. Although there are over 370 credit unions in the UK that serve numerous worker groups and communities, the unions are yet to develop the kind of capacity payday loan lenders have. Also, the loans may be cheap and convenient, however, they can’t be remotely compared to online payday loans.
Other alternatives for payday loans in the UK include bank account overdrafts that are free of fees. With such alternatives, customers don’t incur any fees and penalties. Payday loans are more appealing because excessive fees and penalties have been capped and you get payday loans instantly online with very little to no requirements. For instance, you don’t need to be an existing customer of a payday lender to take out a payday loan. This isn’t the case with bank account overdrafts.

The high cost of traditional credit is largely to blame. According to Labour MP, Stella Creasy, the high cost of traditional credit is behind the strong demand for payday loans in the UK. Although people are extra cautious about payday loans in the UK today, they can’t help but continue taking them because traditional forms of credit are still inaccessible to many because of high-interest rates.

In a nutshell, payday loans in the UK are yet to face serious competition. Although there are currently many types of short-term loans and credit sources in the UK, none is as appealing or as promising as payday loans.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Comparing Payday Loans Online Like a Pro: What you need to know.

There are 500+ online lenders in the UK offering all types of online loans available today. Different lenders, however, offer different deals so, how do you determine the best deal for you when there are so many options? How do you compare online loans like a pro? To help you avoid wasting time and getting confused in the process, below is a guide that lets you know everything you need to know.

Consider the loan amount

How much money do you need? What is the money for? Is the amount justified? Do you intend to spend the money prudently? These are some of the questions you need to answer when you want to know how much you need to borrow. Because different online loan lenders specialise in lending different amounts, you shouldn’t have a problem finding the best lenders for a given amount after you have established how much you need. If you want to borrow say £1,000, you should compare lenders who lend within these limits.

Consider the loan term

Once you have an idea about how much you want to borrow, you need to proceed and determine how long you want to stay with the loan. It’s important to remember that the best loans are those you pay off as fast as possible because they tend to come with better terms (low interest). Once you determine a suitable loan term, you need to compare what different lenders are charging for your preferred loan term. You should obviously go with the lender that charges the best rate for your preferred term. The lender should also offer options for early repayment without fees.

This is another obvious consideration. You should compare the interest rate charged by different lenders before you decide to choose a particular lender. To be able to compare interest charges like a pro, you need to understand how online loans are priced. Online loans like payday loans are priced in APR or annual percentage rate. This pricing structure translates into very high costs if you are unable to pay the loan in time. This is the main reasons why payday loans are considered expensive.

After identifying the lenders that lend within your loan amount and term limits, you should narrow down to lenders that charge the lowest APR. You should, however, be wary of lenders that charge 0% APR since such lenders don’t offer interest free loans as they would want you to believe. The interest-free period is likely to be very short and therefore insignificant. Instead, go with lenders who charge a realistic APR within industry limits i.e. between 1270% and 1509%.

You also need to consider if the type of loan you are taking has variable interest i.e. the rate changes according to the Bank of England interest rate. In such a case, the APR may not matter much especially if you will be holding the loan when interest rates are changing. A short term loan may be ideal in such a case since you may not hold the loan long enough to be affected by interest rate changes. All in all, you choose lenders that charge low fixed rates.

Additional fees

A lender may charge the lowest APR but have additional fees i.e. early repayment fees, processing fees etc. In such cases, you need to assess whether the extra fees make the loan more expensive than loans with higher APRs.

Consider using loan comparison websites

There are obviously very many factors to consider when you want to compare online loans. If you don’t want to spend a lot of time and energy considering numerous variables and computing them manually, you are better off using comparison websites. There are very many comparison sites today comparing online loans from all the major UK online loan lenders. The best sites compare all possible variables from the loan amount to the credit history, interest, monthly repayments, early repayment, name it! They also give accurate information which can be easily verified by visiting respective websites.

In a nutshell, you need to compare many loan options and variables to be able to identify the best lender for you. Most online lenders are sneaky, so you need to do your investigations. The lender you choose should cater for the needs of borrowers like yourself i.e. people with the same credit score, preferred APR and loan amount as yours. The lender should also offer favourable terms i.e. you shouldn’t pay fees on early repayments. The lender also needs to be reputable (licensed/registered/authorised by the FCA).

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.