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Payday Loans

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Representative Example: Amount borrowed: £250 for 3 months.Number of repayments: 3.Interest rate p/a: 292% (fixed).Each repayment amount: £137.21.Total repayable: £411.63. APR 1272% Representative

What are CashLady Loans?

CashLady Payday Loans are a short term solution designed to help you overcome immediate financial needs. It is a quick fix solution that is not meant to help with long term debt. CashLady can help you find a payday lender that could accept your application and transfer funds into your account within a few hours upon approval.

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What are payday loans?

A Payday loan is a form of short term credit, traditionally provided to people who require a quick cash injection to help them through a financial emergency.

This type of personal borrowing has become increasingly popular in recent years, particularly with tech savvy customers who enjoy being able to make quick, discreet, online loan applications - often from their mobile phone.

As a result, millions of people no longer need to visit a physical, high street branch to borrow money. Aside from the convenience factor, it also means that people can enjoy a greater level of personal privacy.

Responsible borrowing

Used responsibly, short term credit solutions like Payday loans provide people experiencing cashflow issues with an opportunity to borrow money quickly and discreetly – usually via an online application process.

A Payday loan is designed to be borrowed over very short periods. As such, the interest rate will be much higher than a longer term high street loan. Payday loan providers will make the cost of borrowing very prominent on their websites, including both the interest rate and representative APR. This is to ensure customers are made fully aware of the cost of borrowing before they apply.

Both flexible and easily accessible, short term credit products are designed to be paid back anytime and usually without penalty. A payday loan term could last from 61 days and up to 6 months.

Short term instalment loans (often confused with payday loans) are usually paid back anywhere from 2 to 12 months. With these types of credit agreements, regular payments are made each month so you can pay your loan back in a structured way that suits your budget.

The history of payday loans

Payday loans originated from the United States in the early 1980’s when there was a deregulation of interest rates that stemmed from the Depository Institutions and Monetary Control Act of 1980.

This piece of financial legislation effectively meant that loan providers could offer more personal loans to the general public as the risk was offset by higher interest rates.

The concept of short term lending is far from new. Origins can in fact be traced back to the late 1800’s where it was common for workers in the USA to take out loans before they received their wages.

Before modern banking, people didn’t have such easy access to banks or overdrafts, so a small loan was often needed to pay for things in an emergency.

In this way, the Payday loan industry probably has more in common with traditional pawnbrokers than mainstream financial solutions due to the nature of the product terms and typical loan amount. Because of the smaller loan amounts typically applied for, you may also hear the term ‘micro-lending’.

The loan term for a payday loan was usually a maximum of 35 days meaning that borrowers would need to pay back their loan on, or before, their next payday.

This type of small, flexible finance ensured that customers could obtain funds quickly and easily, without the long term financial commitments often associated with traditional forms of personal credit.

Payday loans - History of short term lending

Payday loans in the UK

Whilst Payday lending originated in the United States, the product is popular with customers globally and has grown exponentially in the UK.

In 2004, the Payday Loans UK industry was worth somewhere in the region of £100 million, fast forward 10 years and the UK payday lending industry is worth somewhere in the region of £2 billion.

The product is not without controversy and the high headline APR’s are an often divisive topic.

In 2014, the FCA took over from the FSA with a firm mandate of regulating the HCSTC sector. This mean that anybody wanting to offer loans of this nature (or act as a broker) would need to apply for FCA authorization.

short term lenders offers different types of payday loans

The effect of this was immediately felt by many with many financial firms deciding not to continue trading.

Those who did want to continue operating undertook an extensive application process and in 2016, most companies started to receive their FCA authorization. For futher expansion of this topic, you are welcome to read our 2016 payday loan industry review.

As the UK Payday loans industry developed and consumer appetite for payday lending grew, some short-term credit providers began to offer a much wider range of products, with some choosing to offer loans that are payable for a period up to 12 months.

More recently, Google’s legislation aimed at payday lending meant that many payday loan providers had to evolve their product offering to ensure they could still advertise their services on the internet. The result of which meant that the minimum loan term for many lenders is now 3 months and ‘payday’ lending is now evolving into a longer term credit product. To illustrate this, see for example how Wonga and QuickQuid introduced a 3 month product and extended their normal lending periods.

Payday loans today (UK)?

Today as a result of market conditions and regulation, we are seeing the payday loan industry move away from the traditional ‘payday’ product and evolve into more ‘mid-term’ loans with settlement periods up to 12 months.

Market value of the UK Payday Loan Industry

This is also due to a market demand for larger loan amounts that can be paid back over a longer term than the more restrictive 30 day period. Although the total amount of credit can increase with a longer term, the monthly repayments are usually less.

Many HCSTC (High Cost Short Term Credit) providers still refer to themselves as ‘payday loan’ providers, perhaps to try and set themselves apart from traditional personal loans products offered by high street banks.

The difference between payday loans and instalment loans

What are the differences between payday loans and instalment loans in the UK?

As discussed above, the strict definition of a payday loan is: a short term borrowing that is fully repaid (including interest and any charges) in one instalment/ payment which usually takes place on your next pay day.

An instalment loan is a loan to be paid back in 2 or more instalments. This means that in a strict sense, payday loans cannot be called instalment loans.

However, some lenders do refer to their instalment loans products as payday loans. As we mentioned previously, this is usually done in order to avoid confusion, with many borrowers associating flexible and straightforward short term finance with the term ‘payday loan’, rather than instalment loan.

Many short term loan providers are now offering longer term credit solutions of up to 12 months. However, almost all instalment loans can be used as a payday loan, with most lenders happy to be repaid in full at any time, without early settlement fees.

Who can apply for a payday loan?

Each payday loan provider will have its own lending criteria stating who it will lend to. However, as a rule of thumb, you will need to be at least 18 years old to apply for this type of finance.

You should also be a UK resident and will normally need to be in full time employment.Most Lenders will also insist that borrowers have a UK bank account into which your funds will be deposited. Your repayments will also usually be taken from this account.

Most short term credit providers will base your loan repayments on your payday, with your first repayment usually taken on your next payday, after you have taken out your loan.

Why choose a payday loan?

Flexible repayments

Payday loans are known to be one of the most flexible loan products available in the UK. This is because they normally allow people to pay the loan early, without incurring some kind of settlement fees.

Despite the listed advantages, the main consideration should be whether or not you should get a payday loan in the first place. This article summarises the points you may be willing to take into account before applying for a credit.

Online loan application

Most payday loan providers give borrowers the opportunity to apply for their loan online. Online loan applications are usually quick, simple and straightforward.

Some loan providers also allow borrowers to apply over the phone and it is possible to find a lender who has high street branches.

Why choose a payday loan?

Access to quick cash

Some payday lenders promise to review your application instantly. If you are approved and no supporting documentation is required, you could have funds deposited in your bank account the same day as your application.

You should check if your bank accepts Faster Payments in order for this to be possible.

Conversely, applying for a loan with a high street bank can take much longer. The application process is often lengthier and banks do not tend to offer the same flexibility with regards to loan terms as a payday lender.

Funds do not tend to be deposited the same day, so if you are in a situation where you need access to money in an emergency, the traditional bank finance route may not be suitable.

Money can be deposited in your bank account same day if approved

Shorter loan terms

High street banks tend to only offer loans of 12 months or more, whereas if you borrow from a payday lender you could have a loan term of as little as 61 days.

Often, customers who need a small cash injection want to limit their money to the purpose of the need. Larger loan amounts could mean excess funds which for some would be tempting to spend on other (unnecessary) purchases.

Smaller loan amounts

Banks also tend to only offer loans over £1,000, whereas payday lenders are much more flexible and you can often borrow as little as £80.

This means you can limit your credit expose to a manageable level. It can also increase your chances of approval, as smaller loan amounts mean a reduced risk if compared to larger instalment loans.

Useful for emergency expenses

Payday loans are designed to be used for emergency expenses, such as an unanticipated repair to your house or your car. They are not designed to be used regularly and borrowers should seek advice from debt charities, such as StepChange, if they find that they are habitually taking out payday loans.

Bank overdraft fees for unauthorised overdrafts can often be expensive and payday loans could be useful for this in some instances.

Many different lenders

Another benefit of a payday loan is having a wide range of lenders available who offer this type of short-term credit. This results in you having a variety of choices between the many loan products and lenders that are on offer. You are also not tied to a financial institution that you already use for your banking.

Flexibility and speed of the application process, arguably make payday loans a much more convenient form of quick finance than a bank loan.

How do I apply for a payday loan?

Apply directly

There is always the option of applying with a direct lender. Applying for short term credit tends to be quick and easy, as you can carry out the entire application process online, from the comfort of your own home.

You will need to input information such as your address, employment details and expenses, into an online application form.

If approved, the money could be sent straight to your bank account, in as little as a few hours. The amount of time it takes for the cash to reach your account depends on the lender’s terms and conditions, as well as your bank’s payment terms, such as whether your bank accepts Faster Payments.

Apply through a broker

You could also apply for a payday loan in the UK with a specialist payday loan broker, such as CashLady.

To do this, you will need to complete an application form online, so your application will be instantly seen and considered by a trusted panel of short-term lenders.

Applying through a specialist broker could increase your chance of being approved for a loan, as you are submitting your details to more than one lender in the same application.

CashLady (for example). presents your application to around 15 lenders.

This service from CashLady is free of charge. Additionally, CashLady promises that we will never work with any fee-charging loan providers, so you know that by submitting your application in this way, you will not be charged an application fee for your payday loan.

Any payday lender should be FCA authorized

The truth about payday loans

This service from CashLady is free of charge. Additionally, CashLady promises that we will never work with any fee-charging loan providers, so you know that by submitting your application in this way, you will not be charged an application fee for your payday loan.

In the past, the payday loan industry has received negative press, primarily on the topic of high APRs and customer care.

Many Payday lenders were fined by the Financial Conduct Authority (FCA) and which didn’t reflect well on the industry.

Since then, unethical lenders have all but left the market and the industry is now one of the most regulated financial service sectors in the UK.

In 2015, as part of their review process, the FCA introduced price caps on all high-cost short-term credit products. This included payday loans.

Any payday lender should be FCA authorized

The price caps ensured that financial institutions offering payday loan/short term credit products, must meet the following criteria:

  • Interest and fees charged to borrowers cannot exceed 0.8% per day of the amount borrowed
  • Default fees must not exceed £15. Lenders can continue to charge interest after default but this must not be higher than the initial rate
  • Borrowers should never pay more in interest and fees than 100% of the amount borrowed.

Any reputable payday loan provider should be FCA approved and committed to responsible lending.

Responsible lending involves carrying out strict credit and affordability checks to ensure that customers can afford the loan repayments on the amount and loan term applied for.

Over the years, the payday loan industry in the UK has evolved considerably and all FCA authorized short term credit providers focus on responsible lending.

The convenience of borrowing and the flexibility offered by payday loan providers, means that the popularity has continued to grow.

Payday loans are designed to be a type of short-term credit for emergency expenses. As such, they provide a service for people who need cash fast and often have no-where else to turn.

Many payday lenders now have high scores on review websites, such as TrustPilot or and it is not unusual to see a lender within hundreds of reviews from satisfied borrowers.

Do payday lenders charge fees?

  • Most payday lenders do not charge borrowers any fees or charges to make an application for a payday loan.
  • Interest is payable on the amount that you borrow. This is usually included in your monthly payments that you make to pay off your loan.

Most lenders do not charge for payday loan applications

Lenders tend to use Continuous Payment Authority (CPA) to take your repayments. This means that you do not need to worry about forgetting to make the payments, as with CPA they will be taken automatically. Your repayment date/s and amount/s should be shown on your contract.

Some lenders charge a default fee if you do not make a repayment or if you do not have enough in your account for the lender to take the money. However, as per the FCA rules, default fees must not exceed £15.

Is there anything I should look out for when choosing a payday loan?

All UK payday lenders must be authorised and regulated by the FCA.

You can check a particular lender’s status by searching the FCA register.

Check out their customer reviews and see what other people have to say. This will give you some valuable insights into the way the company operates.

Knowing how important it is to deal with a reliable credit provider, we provided some insights which may help you to choose a good payday loan company.

I’ve heard that payday loan providers charge very high interest rates - is this true?

It is a legal requirement for lenders to advertise their Annual Percentage Rate (APR).

APR is a useful tool for comparing the cost of borrowing with different lenders. It shows the amount of interest on a loan on an annual basis.

However, most payday loans are much shorter than a year. This is one of the reasons why the APR looks a lot higher with payday lenders, than a typical bank loan APR.

The minimum APR you will get from us will be 68.7% APR and the maximum will be 1295% APR. If you want to find out more about APR, you can read our APR guide.

Payday loan rates such as APR are a useful tool for comparing the cost of borrowing money with different lenders.

How do I repay my payday loan?

You will usually repay your loan via either Direct Debit or Continuous Payment Authority.

Your repayment dates will be set when you are approved for your loan. Your first one should usually be after your next payday.

As mentioned above, your loan repayments should include total amount payable (including interest and original loan amount). These payments can be divided either equally or unequally, depending on the loan provider. You should be provided with a full illustration of your loan agreement, including a schedule for all future repayments, before you commit to any credit agreement.

If you are having trouble paying your loan, you must contact your lender as soons as possible to find a solution.

Will taking out a payday loan affect my credit score?

As a form of finance, payday loans could help borrowers to prove that they can sensibly manage their finances and credit commitments.

If you have taken out a personal loan and repaid it on time, anyone looking at your credit record in the future may have a more favourable view of your creditworthiness.

However, if you miss repayments, this could negatively affect your credit rating.

Before taking out any loan, it is important to ensure that you can afford the repayments and that you repay your loan on time.

Can I get a payday loan without undergoing a credit check?

Some lenders offer 'bad credit' loans. These are loans designed for people with a poor credit history and may carry a slightly higher APR, depending on the level of perceived risk.

Despite a common misconception that some lenders will offer a loan product without undergoing a credit check, people who are potentially a higher credit risk will almost always undergo a form of credit check. Indeed, a credit check is a legal requirement.

Some lenders may offer credit to existing customers who have built up a strong history of consistent loan repayments but this would always be at a lender’s discretion and highly improbable for new customers.

Even if you are applying for a 'bad credit' loan, you should still ensure that you always borrow within your means and make your loan repayments on time.

It is important to remember that not everyone who applies for a ‘bad credit’ loan will be accepted.

By applying through a broker, such as CashLady, you could have a better chance of being approved for a loan, because your application should be seen by more than one lender.

Are 'Payday' loans also 'bad credit' loans?

A common misconception is that Payday loans are designed for people who have bad credit.

This is often thought of because of the higher APR Payday loans typically offer.

Although people with a lower credit score may find it easier to obtain a payday loan than a normal bank loan, the truth is that most people do not want or need to borrow such large amounts of money.

HCSTC providers need to undertake extensive affordability checks before issuing any form of credit, which means that your credit score and payment history will be properly assessed. If you your credit score is very low, it could mean that you will not be eligible for this type of finance altogether.

Credit checks are a legal requirement for payday loans

Payday Loans – Summary

Hopefully you have a better understanding of Payday loans and the difference between similar financial products, such as instalment loans.

Used responsibly, Payday lending provides many customers with immediate access to credit which they may not be able to obtain from anywhere else. FCA price caps and strong legislation mean that the industry is now much more focused on the customer experience – something we believe can only ever be a good thing.

Price caps ensure that borrowing can never reach unmanageable levels and affordability checks should mean that nobody is given credit they cannot pay back.

Short Term Loan Charges

Loan Amount (£):  

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Representative 1272% APR
Representative Example
Amount borrowed: £250 for 3 months
Number of repayments: 3
Interest rate p/a: 292% (fixed)
Each repayment amount: £137.21
Total amount repayable: £411.63
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Further Payday Loan Information
What are Payday Loans - a quick guide
The History of Payday Loans
Payday Loans Online - Compare Alternatives
Guaranteed Payday Loans. Does such a thing exist?
How safe are Payday Loans?
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Which Payday Loans are the cheapest
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