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How do payday loans work in the UK?

How do payday loans work in the UK?

A payday loan is a small loan, lent at a high interest rate, under an agreement that it will be repaid after a short period of time, usually when the customer is next paid.

Payday loans originated from the United States as early as the 1900s, when lenders purchased a borrower’s upcoming salary for an amount less than the salary. The industry boomed in the 1990s and the payday loan credit model has been adopted worldwide.

In the United Kingdom, payday loan lenders are regulated by the Financial Conduct Authority (FCA) and must comply with the rules that govern them. Some of the most well known regulations in this market include a cap on interest, a cap on default fees and a cap on repayment collection attempts using a continuous payment authority.

Payday loans are often used in situations where cash is needed to account for a financial shortfall. They are classified as a short term credit solution because they are normally provided for a short period of time, such as until your next payday. Payday loan repayments may also be split over 2 or 3 months, if that better fits the borrower’s circumstances, and some may even go on for as long as a year but, at its core, a payday loan is a short duration product that needs to be repaid in a relatively short space of time.

As well as offering loans for a short period of time, payday lenders typically offer loans that are small in value, often between ?100 and ?1000, though the amount you can borrow will depend on your credit history. The maximum a payday loan can cost in the UK is ?24 a month per ?100 borrowed (based on a 30 day month).

The application process for payday loans is straightforward. You fill out a simple application form with your personal details and bank details, and a decision on your application is usually made within 24 hours. Getting approved for a payday loan will depend on your credit score and the lender’s assessment of your affordability.

Looking for a payday loan? Try our cheaper credit line instead!

Polar Credit is a direct lender offering a revolving credit facility that you can use every day to help with your daily expenditure. An account with us lets you withdraw funds when you need to, with cash transferred to your bank account within minutes of approval.

We know what matters to customers when they are looking for credit – a simple online application form, a quick decision and fast access to cash. Our credit line brings all of this together but in a product that also comes with a much lower interest rate when compared to a payday loan.

Application form

We ask you to provide us with some information about you that helps us make our lending paydayloansohio.net/cities/bowling-green/ e, address and date of birth together with the details of your employment, income and expenditure. The entire application process is done online and, because we are a direct lender, we tell you the outcome of your application in only a matter of minutes.

Our lending decision

We use the information that you’ve provided in your application form together with the information in our own database and the information that we receive back from the credit reference agency to make a quick decision on your application. It is important that you accurately fill in the application form to make sure that we have access to all the right information to help us assess your application. If the information that you provide does not match our records we may have to ask for further information to continue with your application.

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