Considering a payday loan? Get advice first.

Payday loans are an expensive form of short-term credit used by many as a source of fast cash. Although these loans are meant to be paid back by next payday, many people cannot afford to do so and are forced to rollover the loan, leading to an ever-mounting cycle of debt. Don't fall for the payday loan trap.

Payday Loans vs Other Consumer Spending

In the last seconds...

Payday Loan Lending:

£

Donated to Religious Causes:

£

Spent on Mobile Gaming:

£

Spent on Fish and Chips:

£

Spent on Cinema:

£

Spent on Tea:

£

Spent on Parking Fines:

£
References
(1) £2.8 billion in payday loans in 2012 - http://bit.ly/1nUoLun
(2) £1.581 billion donated to religious causes in 2011/12 - http://bit.ly/1yDsqQF
(3) ~£1.56 billion spent on mobile games in 2015 - http://bit.ly/1ql9k1p
(4) £1.2 billion spent on fish and chips annually - http://bit.ly/1yDsCiO
(5) £945.1 million spent on cinema tickets in 2012 - http://bit.ly/1u0z7NU
(6) £655 million spent on tea annually - http://bit.ly/WnBtYp
(7) £234 million spent on parking tickets in 2011 - http://bit.ly/Ugl3j4

Things to Consider

Before taking out a payday loan, be aware of these important facts.

  1. Payday lenders profit tremendously from people not paying back on time.

  2. Half of the money lenders bring in comes from the 28% of loans that are not paid back on time and are rolled over. If you have already taken out a payday loan, don't be tempted by your lenders seemingly generous offer to extend your loan until next month -- it can become a vicious debt trap.

  3. Payday loans may harm your credit rating.

  4. While no payday lender will admit to this (and they may even argue that the loan can improve your credit score), evidence has shown that some mortgage lenders are weary of lending money to payday loan borrowers, even if they paid it off on time.

  5. The payday industry is rapidly growing.

  6. The payday loan market size has been estimated at around £2.2 billion in the 2011-2012 financial year. This is up from an estimated £900 million in the 2008-2009 financial year. Over 8 million payday loans were taken out in 2011-2012. In this same period, StepChange reported an over 120% increase in the number of people they helped with payday loan debts.

  7. A payday loan in the UK is much more expensive than in other developed countries.

  8. The majority of lenders in the UK have a representative APR of 1,500%-3,000%, with one of the most prominent lenders, Wonga, having an APR of 5,853%. In comparison, most of Australia has capped the APR at 48%, and most states in America have APRs around 300%-500%.

  9. There are numerous cheaper, less risky alternatives to payday loans.

  10. Take your time and consider all of your options before contacting a payday lender. Review our list of payday loan alternatives by clicking on the tab above.

Alternatives to Payday Loans

A payday loan should be avoided in most circumstances. Review your options below for when you are short on cash.

  • Visit your credit union. Loans from your local credit union are much cheaper than payday loans, with a typical APR of around 10-30%.

  • Cut back on your spending. Look for ways to reduce your spending on things you don't absolutely need.

  • Seek help from family and friends. When in a pinch, those closest to you are a source of help that you shouldn't ignore.

  • Sell unwanted possessions. Take a look around your home for items you no longer need and sell them for much-needed cash.

  • Get advice on your debts. Visit a local debt advice centre, such as Citizen's Advice or StepChange, for impartial advice on your debts.

Best Payday Loan Options

Before continuing, go back and read over your alternatives one more time. If you're still looking to take out a payday loan, make sure you will be able to repay the loan on time, and then review our list of the best payday lenders below.

  • CUOK Pay Day Loans. Although it is only available to those who live or work in central London, a CUOK loan from the London Mutual Credit Union is the best option for those looking to take out a payday loan. With a representative APR of 42.6% and a total repayment of only £103 for £100 borrowed, it is over 8 times cheaper than loans from other traditional payday lenders. CUOK also allows a repayment period of up to 3 months, whereas most other lenders allow a maximum of one month.

For those who are unable to take out a loan from CUOK, we will update this area with any other best options as they become available.

Where to Get Advice

Fortunately, there are many places you can go if you are struggling to manage your finances or suffering from debt. The organisations below can provide you with free and unbiased debt advice, so you can sort out your finances and avoid taking out a payday loan.

  • StepChange Debt Charity. Provides free advice, counselling, and a suite of tools to help you reduce your debt and repair your finances.

  • Citizens Advice. Visit your local CAB office for free help with debt management, welfare, housing, employment, consumer complaints, and other issues.

  • National Debtline. You can call National Debtline for free debt advice. Their services cover England, Wales, and Scotland.

  • Money Advice Service. An independent organisation set up by government that provides free and impartial money advice.


New rules to protect consumers from payday loans.

Beginning in April 2016, the Financial Conduct Authority (FCA) is now regulating the entire consumer credit market, including payday loans. Read about how this may affect you in our blog post.

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