With over 80 different direct lenders and hundreds of brokers in the UK, it can be confusing trying to compare payday loans, especially if this is the first time you’ve ever thought about taking one out.
If you’re considering taking out a payday loan, what do you need to do to find a competitive and affordable loan for your personal and financial circumstances?
Compare payday loans – frequently asked questions
- How can you find the best Payday Lender and compare them with others?
- Who are the Top 10 Payday Lenders and how can I compare them?
- Where can you find the best lender with no credit check?
- Can Growing Power help me find a loan if I have poor credit?
How can I find the best Payday Lender and compare them with other?
Comparing bad credit loans is difficult if you’re applying directly to lenders themselves. Why is that? Each lender has certain types of loan they specialise in and certain types of borrowers they like to approve.
The closer you are to each of a lender’s preferred criteria, the better the loan offer you are likely to get. But how can you compare lenders if they don’t tell you the types of loans and borrowers they prefer on their website?
Who are the Top 10 Payday Lenders and how can I compare them?
A payday loan is a type of loan where you borrow the amount of money you need for no more than 35 days. Usually, you would select the day on which your next wages are paid to repay the loan.
20 years ago, borrowers could really only apply for payday loans at cheque cashing shops. With the advent of high-speed internet and big data, more and more online payday loan companies began taking applications from borrowers on the internet or on mobile phone apps.
With a payday loan, there’s only one repayment you need to make. That repayment is for the original amount of money you borrowed plus the interest on top. For many borrowers, all this did was move a financial problem they had today slightly forward in the future because it was often a struggle to repay everything in one go.
Lenders then decided to offer longer-term loans (generally between 3 and 12 months) to give borrowers the opportunity to take out a loan. A longer repayment time meant that the monthly repayments they made were often a lot shorter than the one-off payday loan repayment. However, the flip side to this was that, if a borrower took out a loan over a longer period, they would likely pay more in interest on a loan with a 3-12 month repayment period.
In the mid-2010s, a lot of controversy surrounded payday loans and short-term loans – many politicians and campaigners expressed the opinion that payday loan borrowers were paying too much and they were being treated too harshly by lenders if they fell behind on their repayment or repayments.
The Financial Conduct Authority (FCA) agreed and, as a result, they set out new guidelines for payday loan and short-term loans to follow. These guidelines stipulated that:
- no borrower could pay more than 80p per day in interest charges,
- no borrower could be charged more than £15 in late fee charges (or other administrative fees), and
- the total amount a borrower pays back in interest and charges could be no more than the original amount of the loan.
Payday lenders are authorised and regulated by the FCA to offer these types of loans to borrowers. However, to do so, they must follow the strict guidelines mentioned above and they must check to see that a loan is affordable before they approve a borrower’s application. As part of these checks, they must run a credit check on an applicant.
There are 80+ different payday loan and short-term loan lenders in the UK. Each lender has their own internal guidelines on how much money they’ll lend to borrowers, how long for, how much money a borrower needs to be earning to qualify, and more.
With 80 different lenders, it’s impossible to say who the top 10 payday lenders or the top 5 payday lenders are. The best way to answer this question is to make sure that you apply to a lender who can offer you an affordable and competitive loan which is right for you and your financial circumstances.
Where can I find the best lender with no credit check?
As we mentioned above, each FCA-authorised and regulated lender must carry out a credit check on each borrower who makes a full application for a loan. No credit check loans are not regulated by the FCA.
If you’ve ever wondered about credit checks, what they are, and why they are important, we’ve prepared the top six questions you need answering on the subject just below.
What is a credit check?
There are two types of credit check – a soft credit check and a hard credit check. Lenders may make one or both types of credit checks when you apply to them for a loan.
What do credit checks tell lenders?
A soft credit check is like a “background” check on you – they’re often used by companies to check whether you’re eligible for a promotion. Only you can see soft credit checks on your credit report and they do not affect your credit score.
What is a credit score?
A credit score is rating given to you by a credit reference agency. There are three credit reference agencies in the UK - Equifax, Experian, and TransUnion. Your credit score is a score in numbers which gives a credit reference agency’s assessment of how well you manage your finances.
Each credit reference agency has their own scoring system meaning that you, in fact, have three different credit scores. A lender will generally rely on just one of the three credit reference agency’s scores as part of the decision-making process on whether to approve your loan or not.
What’s on a full credit check?
In addition to considering your credit score, a lender will ask an agency for a full credit report on you when you’ve completed a full application for your loan. They have to do this by law.
A full credit check is an in-depth snapshot of your current and past financial situation. It contains all the credit cards, personal loans, and other types of financial products you currently use, how much credit is on each type of account, how much of that credit you’ve used, and whether you make the repayments on time.
Why are they important to lenders?
Your credit score and credit report give lenders an idea on how well you manage money and how much you rely on credit cards, loans, and so on. They’re able to judge how risky a loan might be to a particular borrower – the riskier the borrower, the higher the interest rate on the loan they would take out.
How do bad credit lenders view credit checks and credit scores?
They are important still – they are a major part of their decision-making process on whether to give you a loan.
But, if you do have a bad credit rating, please don’t let that necessarily put you off. Over 5.5m loans a year are made by bad credit lenders to Brits every year. For bad credit lenders, while credit scores are still a big factor when they’re making their mind up on your application, they also take into account where you are now financially. Remember that 5.5m are approved every year without needing a guarantor.
Should I apply direct to a lender for a loan if I have poor credit?
We work with over 40 trusted and established Financial Conduct Authority (FCA)-approved lenders. When we let a lender onto our panel, we ask them what types of loan they like to make and the types of borrowers they prefer to work with.
Because lenders don’t want to spend a lot of time and money on processing applications from borrowers they wouldn’t normally lend to, they tell us in great detail about the types of borrowers they work best with and about the types of loans they like to make.
When you fill in our application form, we take the information you give us about yourself, how much you want to borrow, and why you want to borrow the money and then we match those details to the information each lender has given us.
For us, it’s not about the top 10 payday lenders or the top 5 payday lenders. When you apply through us, our job is to find a bad credit lender who wants to offer a competitive and affordable loan to you.
After you’ve completed your application on our site, we then approach only the lenders on our panel who we think are likely to want to progress your application based upon what you’ve told us.
The lenders we initially approach generally get back to us within seconds. At that point, we’ll then redirect you automatically to the site of a lender on our panel likely (although not guaranteed) to offer you a loan. You’ll need to complete the application form on their site and they’ll get back to you with their answer almost immediately. Please note that we can’t match every borrower with a lender – we may not be able to help you.
Our service is completely free and there’s no obligation on you at all to proceed with the offer we find for you.
You should not consider taking out a payday loan unless there is no other way of getting the money you need and you are absolutely certain you can meet the repayment in full on the date you agree with your lender. If you are in debt and you want help to manage it, there are a number of free services available for advice and support – StepChange, PayPlan, National Debtline, the Debt Advice Foundation, the Money Advice Service, and Citizens Advice.
Apply for a loan between £100 and £10,000 with GrowingPower. You can choose a repayment period of between 3 months and 60 months. Your loan could be on its way to your bank account within minutes* of completing the application form on the lender’s website.
Click here to apply for your loan.