What are online loans?
Online loans UK is also referred to payday loans or quick loans. They are a form of short term borrowing which does have high-interest rates. Online loans in the UK are often used in emergencies, for lower loan values, and by those who are not eligible or do not need traditional lending.
Online loans UK has a quicker, more simple application process than traditional loans. Traditional loans are usually much more complicated, for larger amounts, but have lower interest rates.
In the UK, good examples of reasons to use an online loan, are things like emergency car and home repairs.
Online loans in the UK are normally for between £80 and £500 and have to be repaid by your next payday, or soon after. Hence the term payday loans.
A quick history of online loans UK
Short-term borrowing gained popularity in the UK after the last recession, growing again in normality after 2004. They became available online soon after with the advent of the internet and digital transactions. Today most short-term loans are obtained through a website. They are commonly called online loans in the UK.
After much scrutiny in the UK for high-interest rates and charges payday lenders became regulated by the FCA in April 2014. The FCA or Financial Conduct Authority took over consumer credit regulation in the UK, and scrutinised lenders to make sure they met certain conditions.
The changes made taking out an online or payday loan safer for borrowers in the United Kingdom. Payday loans were and are also popular in the USA.
Though safer, by being heavily regulated in the UK, online loans should be used with caution. Borrowers must remember the shorter loan repayment terms and higher interest rates. Anyone with ongoing financial difficulties should look for professional financial advice online or with a UK charity or organisation like Citizens Advice UK.
Who are the FCA?
The FCA is the Financial Conduct Authority. They are a UK only organisation responsible for consumer credit regulation. That is the regulation of financial products like credit cards, overdrafts and loans. The FCA operates independently of the UK government and is funded by charging fees to members of the financial services industry like online loan brokers and lenders. The FCA was formed in 2013. It has the power to regulate the marketing, and standards, of financial products.
How do online loans UK work?
You can apply for a short-term, or online payday loan, in the UK via the internet. The process is faster and simpler than traditional lending and can be completed digitally. Though, you may need to speak to your online loan company on the phone to verify your identity. You may also need to use your phone messaging service to verify your agreement to your loan terms and conditions. Always remember to check any terms and conditions thoroughly and make sure you understand them.
- You must be living in the UK.
- You need to be employed in the UK earning at least £500 per month.
- You must have a UK bank account.
- You will also need a working mobile phone and email address.
- You will complete an application form.
- If a lender initially accepts your application they will conduct affordability and credit checks.
- If you pass the checks, you will agree to the loan terms, and sign, or electronically agree to the loan.
- The loan funds can then be sent to your UK bank account.
Online loan terms in the UK are usually until your next payday. Some lenders will allow you to “roll-over” your loan, but you will incur more interest. Rolling over payday loans is not recommended due to higher interest rates.
How do I find online loans UK?
Find an online loan company in the UK directly
You can search the internet via a search engine like Google UK. There are hundreds of online loan companies. You may also see an advert elsewhere or have an online loan company recommended to you by someone you trust. You should carefully assess whether a loan company is reputable, look for independent reviews, and make sure they are registered with the FCA in the UK.
Find an online loan company via a UK loan broker
Another way to find an online loan company in the UK is via a UK loan broker. CashLady is one such example. Again, you should thoroughly assess your UK online loan broker for their credibility. A loan broker will be FCA registered and have a panel of FCA registered lenders which they have also vetted.
Using a loan broker means you can submit a loan application to a number of UK online loan providers at once. Your loan broker will send your application only to those who may be suitable for you and may offer you a loan. You can then compare any offers you receive, and choose to proceed directly with the online loans UK lender of your choice.