Payday loans UK no credit check is one of the most sought after loans in the UK by people who have a poor credit rating. People who have a less than perfect credit score can find it difficult to get a loan and more so if they need to get hold of money fast. Payday loans are generally one of the easiest types of loans to find approval for, but there are some advantages and disadvantages.
In this article, we are going to discuss all aspects of the payday loan. You can find out information such as:
- What a payday loan is;
- Situations in which applying for a payday loan might help;
- Situations in which applying for a payday loan will not help;
- Whether you can get a loan without a credit check;
- How much you can borrow with a payday loan;
- How long a payday loan can be spread over;
- Loan eligibility;
- Why are payday loans controversial?
- Applying for a payday loan.
What is a Payday Loan?
A payday loan is a small loan that is designed to lend a financial hand in the event you need to get hold of money fast.
The loan is classed as being a short-term loan, a loan paid back very quickly so you are generally not seen as being a big risk to lenders even if you have a poor credit rating.
This means the loan is usually easier to find approval for than other loans if your credit rating is less than perfect.
Lenders usually do not ask why you need the money and the entire loan application can be undertaken online without the need for any paperwork. The funds from payday loans can usually be paid into the applicant’s bank account on the same day.
When a Payday Loan Might Help
A payday loan can essentially be taken out for any reason. However, most people apply for payday loans to meet a financial emergency. A payday loan might help in cases such as:
- A large bill that has come in and you need to pay it before your next payday;
- You have gone into an unauthorised overdraft and face high bank charges on a daily basis but payday is some time away;
- Your vehicle has broken down and you need money fast to pay for repairs;
- You forgot to budget for the cars MOT and it is due before your next payday;
- Your cooker or fridge has broken down and you need to get it repaired or replaced;
- Emergency home repairs such as for water leaks.
In any of the above instances, you could benefit by applying for a loan and having funds transferred directly into your bank account on the same day.
When Not to Take Out a Payday Loan
A payday loan should not be considered as a long-term solution to financial issues. It may not be suitable in the following situations:
- You find yourself short of money on a regular basis and are thinking of applying for a payday loan;
- You would have to roll over the payday loan or apply for another as soon as you pay off the loan;
- You know repaying a loan would leave you with very little money for the rest of the month;
- To pay off another loan.
Can I Get One Without a Credit Check?
When you apply for a loan of any nature in the UK, the lender is going to perform some type of credit check. However, the depth of the credit check may differ depending on how much money you are asking to borrow.
Therefore, there is no such thing as payday loans UK no credit check.
The good news is that as you are asking only to borrow a small amount of money and you are going to be repaying it back quickly, the lender is not going to look too deep into your credit history. They will take a quick peek.
Lenders look into your credit history to determine how big a risk you are for repaying a loan. It makes sense that if you have defaulted on repayments or still has loans outstanding that you have issues paying, they are going to be wary of allowing you to borrow thousands of pounds. However, with payday loans the amounts are small.
The panel of lenders we work alongside will also consider loan affordability and verifiable income.
They understand that your current circumstances may be a lot different from when you earned a bad credit rating.
Lenders will look at your income and outgoings to determine if the loan is going to be affordable, but they will take a quick look into your background too.
How Much Can I Borrow?
Payday loans only offer a relatively small sum of money when compared with other loans.
The amount you might be able to borrow with a payday loan is going to depend on loan affordability and the lender.
Usually, lenders offer between £100 and £500 with payday loans.
Of course, before you take on a loan you do need to ensure that you can afford to repay the loan and that it is not going to leave you short of money on your payday or paydays.
When Do I Need to Repay it?
When payday loans first arrived on the market, you borrowed the money and paid the loan back in full, with any interest, on your next payday.
This still applies today and you can borrow money and repay it in full on your next payday. However, lenders now give people the opportunity to spread the loan out for up to three paydays. This is assuming that you are paid on a monthly basis. So in effect, the loan can be spread out over one to three months.
While it might sound tempting to spread out the loan for longer there are some things to take into account. There are advantages and disadvantages to each.
The advantages of paying off the loan on one payday include:
- The loan is paid off in full on your next payday and is behind you;
- You do not have to budget over three months knowing a chunk of money needs saving towards paying the loan;
- The loan is going to cost less in total.
The disadvantages of spreading out the loan include:
- The longer you take the loan over the more interest it accumulates;
- The longer the loan the more it will cost you in total;
- You are going to have to budget to take into account the lender is going to retrieve money from three paydays.
As you can see from the above you do have to weigh up which way is better for you. Spread the loan out for up to three paydays or pay the loan off in one lump sum with interest added.
If you decide to spread the loan out over three paydays remember to ensure you note the dates the repayment will be taken and ensure you have the money in your account on those days.
To be eligible to apply for a payday loan in the UK you must:
- Be 18 at least;
- Live in the UK;
- Have a regular income;
- Have a bank account in your name;
- A debit card in your name;
- Be able to set up a direct debit on the bank account.
Why Are Payday Loans UK No Credit Check Controversial?
Payday loans have caused quite a stir in the past and become somewhat controversial.
Media reports have made them out to be something that should be avoided like the plague.
News reports have made many claims including:
- The loans attract a high rate of interest;
- Unethical lenders prey on people with poor credit;
- People borrowing did not understand the APR;
- Lenders encouraged people to roll the loan over to accumulate interest;
- Unethical payday lenders did not make affordability checks;
- Unethical lenders did not co-operate with debt charities.
Some of the above may be true but most of the issues derived from unethical lenders on the market.
The Citizens Advice revealed that in nine out of ten cases lenders did not ask borrowers to show them documents’ proving the loan was affordable. Seven out of ten people said they had been pressured to extend the loan.
Now the majority of unethical lenders have been closed down and rightly so, leaving the way for ethical lenders to offer payday loans only after all the necessary checks have been undertaken.
All lenders on the panel that we work with will make sure that the loan is affordable by checking the borrower’s income and outgoings and ensuring they can afford to repay the loan. Loans are also now more transparent with the FCA watching over them and lenders explaining the total cost of the loan.
High Rates of Interest
The APR of loans also came under fire. It is typical for the APR on payday loans to be thousands of percent compared to double figures on personal loans.
This does cause uncertainty in some people. However, it is important to bear in mind that the payday loan is not taken out over years. It is a loan that is repaid within one to three months, therefore the loan is not going to accumulate the interest shown on the APR.
If a payday loan is taken out and repaid as agreed, it can be a viable solution to overcome financial issues as a one-off for the unexpected.
Payday Loans Are Now Watched Over by the FCA
Now the cost of borrowing with payday loans has fallen the FCA confirmed.
The FCA now watches over the payday loan industry ensuring a fairer deal for borrowers.
Payday loans are capped with interest and fees not going over more than 0.8% of the amount borrowed per day.
Any fixed default fees are now capped at £15, which the FCA said is going to protect those who are struggling to repay the loan.
Along with this, there is a total cost cap of 100%, which puts protection in place for escalating debts. This means borrowers will not pay more in fees and interest than the amount that they borrowed.
Applying for a Payday Loan
We can bridge the gap between those looking for a payday loan and lenders willing to offer loans. All lenders on our panel are ethical lenders who make affordability checks and offer some of the most competitive rates of interest out there.
To start your loan application, just tell us the amount of money you would like to borrow, between £100 and £500.
Tell us how long you would like to take to repay the loan, between one and three months.
Give us some personal details such as your income, outgoings, age, date of birth, address and bank details and we can search with the panel of lenders that we work with.
You get an instant decision, which means you are not left waiting to find out if your loan has been approved. Best of all, you can search with a large panel of lenders from one single loan application without numerous searches being noted on your credit file.
If one lender cannot offer you a loan, we will move onto the next one on the panel and so on.
If we are able to match you up with a lender, you can then check out the details of the loan. If you agree to them and the repayments you can sign up and have funds deposited into your bank account. In most cases, the money will be paid into your account on the same day.
Apply today with our help, while you might not be able to get payday loans UK no credit check involved, you may be able to get an affordable loan based on your income.