What is a payday loan?
A payday loan is a short-term loan designed to help you last until payday if you need to cover a cost, generally for an emergency, such as your car breaking down. They can be a useful way to help you last until your payday, but should not be taken out for a long period of time.
How much can I borrow with a payday loan?
The amount you can borrow will depend on the payday loan company which you choose, as they offer different amounts.
What can a payday loan be used for?
A payday loan is generally used for an emergency cost such as repairs, or paying bills if you need to wait until payday to be able to afford them.
How much do I have to repay?
You will have to repay the amount that you borrowed, plus interest. The new laws have limited how much this can be, with the interest rate capped at 0.8%. If you borrow £100 for 30 days, and repaid it on time, you would pay £124. However, if your repayment is late, you may face additional costs. For more information on fees, check out our payday loan fees guide.
How do I repay my payday loan?
On most occasions, repayments are made online, automatically (with your agreement). Payday loan companies will usually use a CPA to withdraw the money from your account and transfer it to theirs.
What is a CPA?
A CPA is a Continuous Payment Authority, and allows a bank to take money from your account when they want to retrieve the money you owe them.
Who qualifies for a payday loan?
Each payday loan company has their own terms, but common requirements are that you are at least 18 years old and a resident of the United Kingdom. You will also usually need to have a bank account and debit card.
Am I eligible if I have poor credit?
Each payday loan company has their own rules for eligibility, so whether your application is accepted will depend on the company you choose. However, most companies will accept applicants who do not have perfect credit.
Can I have multiple payday loans at once?
It is very uncommon to be allowed more than one payday loan at once. You are normally required to finish the first loan before you are allowed to take out another.
Can I roll over my loan?
New rules mean that you cannot roll over your loan more than twice. However, it is rare to roll over a loan, and it is not advised.
Will a payday loan affect my credit rating?
A payday loan may affect your credit rating, but it should not have a particularly negative effect unless you fail to repay the loan on time.
How can I find the best payday loan deal?
What you consider to be the best deal varies considerably based on your individual needs. The best way to find the deal you want is to spend some time browsing through payday loan companies and see what each one offers. Alternatively, you could apply with a broker who will suggest the company they think is most suitable for you. You can view a number of payday loan companies on our website.
What else can I do to get money quick?
There are a number of other ways to get money quickly, such as personal loans, overdrafts, credit cards, credit unions and store cards. For further information on each of these products, check out our guide on payday loan alternatives.