Debt problems? Get free confidential advice from StepChange Debt Charity on 0800 138 1111.
Your loan may be automatically extended if you don't repay it in full, this may impact your credit score and cost you extra in fees and interest. Failure to pay could mean you face collection action. If you already have a payday loan don't take out another as cheaper options are available; our guides explain.
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Here is some important information about the practices used by many of the payday lenders we list on money.co.uk. To find out about the specific practices and charges applied by your chosen payday loan lender you will need to check their website and read their terms and conditions carefully before you apply.
You should always make repayments on your payday loan on time and in full. The interest rates and information we list in our comparison tables assume that you will do this. Payday loan lenders each have their own policies regarding non-payment, this affects the additional interest and charges they apply and the debt collection practices they use.
If you do not make your agreed repayments on time then you are likely to be charged extra interest and additional fees. Some lenders will also take legal action if you repeatedly fail to repay. How much extra you are charged and the collection practices used for non-payment will depend on the payday loan lender you have borrowed from; you should check this before applying. Your payday loan payments will be taken out of your account automatically. However, if you do not have enough money in your account to cover the payment you are likely to incur extra charges. You are also likely to be charged interest on your balance at that point; this may be more than the original amount you borrowed.
If you think you may have difficulty making a repayment you should contact your lender immediately. Failure to do so could impact your credit score and result in additional charges.
Non-payment will also be recorded on your credit file. Repeated non-payment may have a negative impact on your credit rating and affect your eligibility for future borrowing. You should always make repayments on time and in full to avoid any repercussions on your credit rating.
It is not advisable to renew or extend a payday loan. However, if you do need to you should contact your lender to arrange an extension before they try to take payment. Most payday loan lenders will charge you an extension fee and additional interest on your total outstanding balance. Some lenders will automatically renew or extend your payday loan if you do not make an agreed repayment. This is likely to cost you extra in additional fees, interest and charges. You should check your chosen lender’s approach to payday loan extensions before you apply.
If you fail to make an agreed repayment on a payday loan most lenders will contact you by phone, post or email to rearrange your repayment. If you repeatedly fail to make repayments then they may use collection practices or take legal action. You should familiarise yourself with the collection practices of your chosen payday lender before you apply.
If you are struggling to make repayments on a payday loan you should contact your lender right away. You can also get free advice from debt charities like StepChange, Citizens Advice Bureau and the National Debtline.
Many of the payday loan companies you'll find on the internet aren't actually direct lenders themselves; many are brokers that take your details, search their panel of payday lenders and apply on your behalf, pocketing a share of the commission.
Using a direct lender instead of a broker means you know what company you're dealing with, making it easier to look into their reputation, how they conduct themselves and if they're regulated.
You can also make an informed decision about cost - some brokers will pass your application to the company that pays them most commission, rather than the one that gives you the cheapest deal.
It will also avoid multiple searches on your credit file, which can sometimes happen when you apply through some brokers.
We work with the payday loan brokers within our comparison to ensure that they only pass applications made via money.co.uk to regulated payday lenders who don't charge an upfront fee so that you get some reassurance about the service you're going to get.
Payday loans can come with high interest rates and fees, meaning that your debt can increase if you don't repay it quickly.
Missing repayments can impact your credit rating too, making you look unreliable to lenders you want to use in the future. Just seeing that you've previously taken out a payday loan can put off some lenders, even if you've managed to meet the repayments.
There are some less risky ways to borrow money, even with bad credit. Our guide looks at some alternatives: What is the Best Way to Borrow Money Until Payday?
If you decide that a payday loan is your only option, you'll need to decide how much you want to borrow and when you can pay it back, as the amount and term each lender can offer you will differ, as will the cost.
When you've chosen a lender and your application is complete, they will transfer the cash to your account.
In general, the longer you borrow the money for, the more it will cost you to pay it back.
Check each lender's terms so you know how long you have to repay the loan. You'll want to pay it back as quickly as you can, but make sure you have enough time to get the money together to repay so you avoid rolling the loan over, as this will be very costly.
You'll need to compare the interest rate, total cost and fees charged for each loan too, as you'll pay back less if these are lower.
Payday loans can give you enough money to tide you over till your next pay cheque clears, but at great cost. We look at whether it's ever worth taking one out, and if so, how to find the one that'll give you the cheapest cash.
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