instant payday loans

How Online Payday Loans work in the UK?

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Payday loans are like short-term loans but they differ in terms of how you pay them off. With short-term loans, you pay off the debt in instalments. And with payday loans, you pay off the entire loan on your next payday in one lump sum. People often face difficulties in repaying the loan in one shot. Keeping this thing in mind, some lenders allow you to repay the payday loan over several months. This financial product plays a dominant role in the unsecured lending industry. These loans are widely popular because they are not secured against any collateral but they can be risky for your financial health.

In this article, we will answer the following questions:

  • What is a Payday Loan?
  • How to Borrow a Payday Loan with a Bad Credit Score?
  • What is a No Credit Check Payday Loan?
  • How to Apply for a Payday Loan Online?

What is a Payday Loan?

A payday loan is a small loan that allows you to bridge the gap between your expenses and current financial condition. You can borrow an amount and repay it within 12 months with the interest charge. They are good for emergencies but should be given a lot of thought before making the decision to borrow. The loan is also known as high-cost short-term loan as the rate of interest charged by the lenders is quite high. The financial regulator – the Financial Conduct Authority witnessed the problem debt of many individuals who were a victim of repeated borrowing. They implemented a capping on the payday loan pricing to safeguard the interests of the borrowers.

If you take out a payday loan, you must know about the price capping that has been placed since 2015:

  • You must not be charged more than 0.8% interest per day (equivalent to £1.60 for every £200 you borrow).
  • If you miss a payment, you can only be charged once for missing it and that charge (or default fee) must be no more than £15.
  • If you add together all the interest payments you make and default fees you pay over the course of a loan, it must not add up to more than the value of the loan you took out in the first place.
  • If you find yourself having trouble paying your loan off, there are certain rules that your payday loan, instalment loan, or short-term loan company must follow.

How to Borrow a Payday Loan with a Bad Credit Score?

A credit score is the reflection of your personal finance management. It gives an overview of your financial behaviour to the lenders who assess your loan application. Individuals who have a high credit score always get loans for a low rate of interest. But if your credit profile has a dent, then many lenders consider you as a risk, so they may turn down your application altogether.

However, there are some lenders who willingly offer payday loans to bad credit score profiles. The interest rate they charge may be high because of the risks that are involved in this for the lender. The lender may lose his money if you do not repay the loan. To minimise the cost of loss, many lenders charge a high-interest rate. If you have a poor credit history, apply for a payday loan to lenders who allow such loan applications. Visit their website or get in touch with them to know about their eligibility criteria before applying for a loan.

What is a No Credit Check Payday Loan?

A no credit check payday loan – as the name suggests is a loan that is given to a borrower without running any credit check on their profile. The FCA has made credit checks mandatory and all the lenders who are authorised by the financial watchdog have to run a credit check before approving a loan application. If you are getting offers from lenders who are not registered by the FCA and are offering you Payday Loans with No Credit Check, it is better to avoid them. It might be a scam and you may become a victim of the fraud.

Rather, connect to lenders who run a soft credit check to know your creditworthiness. A soft credit check doesn’t harm your credit score and also you get an idea of the interest rates that are available to you without hurting your score. Although a hard credit check will be run by the lender before the final approval.

 How to Apply for a Payday Loan Online?

It is easy to apply for a payday loan online in the UK. Rather than standing a queue for long hours and wait for your turn to speak to the bank manager about your issues, convincing them to lend you money – get your laptop and start exploring the websites of various lenders and credit brokers. Every broker has its own “panel of lenders”. A broker introduces people who are looking for a loan to the lenders on their panel. All lenders in the UK must also have a licence from the Financial Conduct Authority as well. Each lender has a “borrower profile” they work to – that’s a set of guidelines describing the types of people they’re happiest to lend money to. It saves your time, money, effort and credit score too.

How Oyster Loan Can help you to Find a Payday Loan?

Oyster Loan is a loan broker and not a lender. We do not lend you money, we have partner lenders who assess your loan application and they lend you the money. The advantage of applying for a short-term loan with us is that you do not have to apply to multiple lenders, which may damage your credit score. Our lenders offer a wide range of short-term loans and you can borrow an amount from £100 to £1,000 without any collateral. All you need to do is fill in the application form and tell us how much amount you need and for how long.

To start your application for a payday loan, click here.