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

The success of online payday loans is, in part, attributed to their convenience. Consumers can borrow money from the comfort of their homes. The process is private. 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.

Text payday loans and how they can be falsely advertised

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.

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

You might imagine that applying for a loan is as simple as sending an SMS message. This understanding of text payday loans 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.

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.

This 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.

Completing application by text

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

You can then apply for a loan by text, 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 by text, they refer to these details to make their lending decision.

Subsequent payday loans by text

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 for loans 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.

Providers that offer text payday loans

Ferratum is one lender that offers text loans.

In this case, you must initially apply for a loan online. Once you have borrowed money and repaid it, you will be approved to make an SMS application.

When you next need to borrow money, you will send a short text with a code and the amount that you would like to borrow. This speeds up the process but is only an option for repeat customers.

If the lender cannot provide the amount of money you want, then they will respond with the largest loan you are approved for. You can send a second text to take them up on their offer.

Are text payday loans a good platform?

Applying by text for a payday loan 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.

Text payday loans and what you should know about them

Lack of repayment flexibility

When you apply by text, you are asked for limited information.

You will not have access to online loan calculators and sliding bars, allowing you to fine-tune your loan’s 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.

Text payday loans broker spam

If you are applying for 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 texts or phone calls.

When you apply for a loan direct 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 payday loan.

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

When you apply by text, 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 that you need to apply online and repay your loan before borrowing by SMS again.

Text payday loan regulation

Providers of text payday loans are subject to the same regulations as any other payday lender. This means that 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 text 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 a payday loan.

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 smartphones and tablets.

Since most payday 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.

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

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

Many lenders that once offered text loans have moved to online application forms 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 loans by text, 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.

If you do want to apply for text payday loans, it is important to ensure that you are using a regulated lender.

These services come with an increased risk of phone spam, including unwanted phone calls and texts. This is why it is important to find a lender that has been approved by the FCA.

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

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