Text payday loans and how they work in the real world

Text payday loans and how they work in the real world
Lauren Howells
Text payday loans and how they work in the real world

The success of  short term loans is, in part, due to their convenience. Consumers can borrow money from the comfort of their homes. The process is private and applications can be processed 24/7.

Text payday loans may appear, on the surface, to be even more convenient.

Here, we look at how they work and what they mean for borrowers.

How text payday loans work

Just like other fast payday loans, text loans are often advertised as a potentially quick source of money. Money can be in your account within hours, once your application is complete.

You might even think of them as instant loans, but the process is not as simple as sending a text message.

As with other loans, you will still need to go through the application process in full. This will include credit checks and affordability assessments, in line with FCA regulations.

You might look for a text loan with no credit checks but these are likely to be scams. Some loans are available even with bad credit but your circumstances will be thoroughly checked before a lender could offer you a loan.

Reputable and responsible lenders will not provide their loans based on the content of a few text messages.

What the text payday loan application process looks like

What the text payday loan application process looks like

You might imagine that applying for a loan is as simple as sending an SMS message. This understanding of loans by text is what can make them seem so convenient.

In fact, text loans often extend the application process.

There are generally three ways for lenders to provide loans by text message.

#1 PIN for security

Most lenders expect you to apply online.

They will then send a PIN by text, which will be used for security verification. You will use this PIN to complete your online application.

The process is often described as a text payday loan, though it is simply text verification. It is a lender’s method of connecting your details to a working phone number. Something which can be used for authorisation and confirmation of identity.

#2 Completing the application by text

You may be able to sign up for text loans, after providing your details online.

You can then apply for a loan by text message, but only after you have already filled in a website-based form.

This means the lender already has your personal details. The details include contact details and income and expenditure figures. When you apply via text, they refer to these details to make their lending decision.

#3 Subsequent payday loans by text message

Some lenders offer quick payday loans by text, but you must already have borrowed and repaid the money.

After successfully borrowing once, you may be allowed to apply with your phone in future.

In these cases, applying could be as simple as sending one or two short messages. This is not an option for new borrowers.

Are text payday loans a good platform?

Are text payday loans a good platform_ (1)

Applying by text for finance could seem like a good idea. There is a chance that you will find the process quicker and more convenient.

There are also several downsides.

Lack of repayment flexibility

  • When you apply by mobile message, you are asked for limited information.
  • You will not have access to online loan calculators and sliding bars, allowing you to fine-tune your repayment terms.
  • Most terms for text loans are automatically set.
  • Usually, the lender will provide the loan until your next payday or will set it to 30-day terms.
  • These loans are unlikely to be flexible.

Broker spam by text message

If you are applying by text, it is important that you choose an authorised lender.

Loan brokers that operate using SMS messages may use your phone number for spam.

You might be asked to send a text to an application number, only to find that you then receive dozens of messages or phone calls.

When you apply directly by text, you will deal with just one lender. If you apply through a broker, you may have many providers making contact to offer their loans.

In some cases, continued text messages may count as harassment. They are likely to become an annoyance and could be hard to stop.

Personal detail changes

Pre-approval is required for any text loan.

The lender will need to have your contact details, bank details and financial information already on their records.

When you apply, a lender will use the information that they already hold about you. If any details have changed, the application cannot be processed.

A new phone number, if you have changed your phone, will not be linked to your account. This means that the lender will not recognise your phone number when a text from you is received.

If your bank details change, you will need to update them online. If you forget, the money may go to the wrong place.

New information must be validated.

Some lenders will let you contact them by phone, change your details and then send a text application. Other lenders will count an information change as a full reset. So you need to apply online and repay your loan before borrowing by SMS again.

Text payday loan regulation

Providers of text finance are subject to the same regulations as any other financial lender. This means they must be authorised and regulated by the Financial Conduct Authority.

Always check before applying. You can ensure that a lender is authorised by checking the Financial Services Register.

If in any doubt, do not proceed with the application.

Mobile friendly websites as an alternative to text loans

Text payday loans and how they work in the real world

In the past, loans by message might have offered the convenience of on-the-go application.

Consumers did not need to be sitting at their PC or carrying their laptop, to apply for credit.

Smartphones have made things easier.

Most lenders now have websites that are optimised for mobile access. This means that they are clear and easy to use on mobile devices.

Since most loan applications must be started online, it makes sense to complete them through a browser as well. This is often much quicker than applying by text message.

If you visit a lender’s website on your phone, you should find that it is easy to navigate around.

You can apply using all the features of the website, rather than using a reduced number of options when using SMS.

Many lenders that once offered text loans have moved to online applications instead. In some cases, they will be happy to send you a text with their lending decision, if that is your preferred method of contact.


Text payday loans may sound quick and convenient, but an online application is usually faster.

To set up the option to apply for finance by SMS, you will usually start with an online application form anyway.

Payday loans by SMS are also less flexible. You will not have as many options to fine-tune your loan application.

The benefit of text payday loans may be the fact that you can apply on the go. Yet, most people now have smartphones capable of accessing websites through a browser. Lenders optimise their websites so that all forms can be filled in using a mobile phone.

Be mindful of your security when applying for a loan by text message. Do not send personal details, or bank account information, to an unconfirmed recipient.