Payday loans have acquired a bad reputation because some lenders are not trustworthy and some borrowers use payday loans inappropriately and then complain about the consequences. If you would like to avoid dishonest quick loans and understand exactly when they are appropriate, please read our articles about instant payday loans. After examining online payday loans, we find three of them worthy of consideration if you find yourself in extreme circumstances: QuickQuid, Payday Express and WageDay Advance.
UK Payday Loans: What to Look For
If you are in a position that forces you to search for the best payday loans, it means that you are under stress, which can lead you to mistakes. Allow us to bring clarity to the selection process and reveal an objective approach to decision making. Please be aware that using a payday loan service is a sign that you are in a rare emergency. If you use online payday loan lenders more than once every few years, something is amiss in your financial planning.
We do not think it will be helpful for us to point out that, ideally, everyone should have accumulated six months’ worth of income as an emergency cash buffer. If you had sufficient credit, you could have a credit card to absorb emergency costs. But you already know these facts and you are, perhaps, too embarrassed to approach your friends or family for a small short-term loan. If you are determined to get a cash advance loan from a payday loan lender, we suggest you consider the exact loan terms, access to customer service and corporate status.
Loan Terms
Although people complain about credit card interest rates at 12–19% annual percentage rates, UK payday loans are much more expensive. But then, quick and fast payday loans are only supposed to get you by until your next payday – a month at most. If you use payday loans according to the rules, when you borrow £200 for one month, it will cost from £50 to £78 in interest. If you turn these rates into annual percentage rates, you are talking about a 326–468% interest rate.
If you really want to know what the effective rate would be if you kept your same day payday loans for a year with all of the fees and compounding interest, the government mandates that lenders must publish a “Representative APR.” If you do not pay off your loan with your next paycheck, the representative APR ranges from 1,737–5,410% annually, which is truly the stuff of nightmares.
Customer Service
When you compare payday loans lenders, make sure you read online complaints before you make a selection. Discover if customer service will support you 24/7 or just during business hours. Some lenders let you call them but then charge you for the call. Some don’t even have a published phone number. Some let you text them for assistance but charge you for the text. Some promise 24-hour loan approval but then charge extra to expedite your application.
Corporate Status
Beware of payday loans UK sites that disclose no telephone number or physical address. These sites are the most likely to be unregistered and unlicensed, and are therefore more likely to be fronts for criminals who really just want to capture your personal identity so that they can defraud you. We suggest that the longer an online vendor has been in business, the more likely it is that the lender pursues an honest business model. Any site that doesn’t voluntarily publish a registered company number or Office of Fair Trading Consumer credit license is probably neither registered nor licensed. Our research uncovered that unregistered and unlicensed sites do not respond to email inquiries whatsoever. Evil loves darkness and attracts ignorance, so research methodically and shine a bright light to avoid grief.
Do not pursue payday loans online except in extreme emergencies that cannot be resolved with a credit card or a loan from family or friends. Do not live in such a way that would force you into taking a payday loan UK. However, if you must take a quick loan: Understand the terms in minute detail. Know how and when you will be able to receive customer service. Have an informed opinion about the lender’s corporate status. But most importantly, always pay back the loan with your next paycheck. Always.