At the height of the financial crisis, more than 8.2 million loans were taken out in the UK.
But, times have changed, haven’t they?
Well, not quite.
Ten years later, and Brits are still struggling to manage their personal finances.
And just like we did a decade earlier, we seek out payday loans.
If you’re considering taking out a payday loan, it’s essential to know what you’re applying for and if you are getting the best deal for your finances. Understanding how to compare payday loans online is the best way to making the right choice.
To ensure that you take out the right payday loan for you, you’ll need to compare loans from multiple providers to find a loan that suits you best.
But, with so many providers online, how do you compare payday loans?
Let’s find out.
1. Pick a trustworthy, direct lender
One of the most significant trends in the payday loan industry has been the growth of indirect lenders and direct lenders.
But, what is the difference between a direct or indirect lender?
Direct lenders are companies that have received authorisation from the Financial Conduct Authority (FCA) to lend money directly to borrowers. Ranging from small, short-term loans of £50 to more substantial amounts up to £1,000.
Traditionally, direct lenders used to be banks. However, the influence of the internet and online browsing by consumers has led to an increase in reputable online lenders. An example of a direct lender is Wonga. You will be pleased to learn that Peachy is a direct lender as well.
An indirect lender acts as a referral service, obtaining a commission from the direct lender as payment for referring them.
Indirect lenders, whilst ultimately legal and reputable, will not be able to support you should you have any questions about your loan.
For example, if you run into financial problems, an indirect lender could not help you.
Direct lenders have customer service representatives who can be contacted if borrowers need a solution to their financial problems.
2. Review the eligibility criteria
Every lender has different acceptance criteria with some lenders willing to lend to borrowers that others wouldn’t be able to offer a loan to.
These criteria can include:
- Type of job
- Monthly income
- Debit card details
- Positive credit score (have you been bankrupt, any CCJs, previous loan defaults)
- Outstanding loans
- Amount you wish to borrow
Although not an exhaustive list, as each lender has their own unique eligibility, always consider whether you can meet these criteria before applying to avoid disappointment.
3. Settle on a lender with flexible payment options
As a borrower, it is imperative that you have access to multiple repayment options that best suit your budget and ability to repay your loan. Not all payday loan lenders offer multiple repayment options. For example, QuickQuid only offer repayment options for up to 3 months whereas many lenders allow you to repay the amount over a 12 month period.
Multiple repayments ease the financial burden on borrowers and make it more straightforward should you require further borrowing.
4. Always check comparison sites
According to a Citizens Advice report citing FCA statistics, 98% of UK borrowers agree that accessing payday loans is easy.
Since June 2017, all payday loan companies must list their loans on loan comparison websites – making it even easier to find a suitable payday loan listed on a comparison website. So, if you’re looking to apply for a Sunny loan, check a website like All The Lenders first to learn more about them.
Comparison websites can demonstrate the loans cost, the repayment options, how much are the repayments, and how much the loan will cost once you have fully repaid the amount.
5. Choose the type of loan wisely
Online comparison websites can educate you about the different loan types you can apply for. Applicants with a poor credit history can apply for bad credit loans as a method to return to a solid financial foundation (if they repay on time as per the terms of their loan).
Using a comparison website is one method of searching for the right loan for your needs.
6. Find a loan with low APR
Annual Percentage Rate (APR) is the interest rate that you repay on top of your borrowed loan amount. If you want to boost your credit rating and yet still require cash, you should choose loans with low-interest rates.
The amount you can borrow will be limited; however, the subsequent experience of borrowing and repaying on time will build your creditworthiness.
Finding a low APR rate can be challenging but is an important part of your payday loan comparison process.
According to Money Advice Service, the average payday loan APR is 1,500%, but here at Peachy, we recently lowered our APR to 720%.
7. Select a provider that pays quickly!
Payday loans should only be used in times of emergency.
Hence once a payday loan has been granted, borrowers need to know when they will receive their emergency funds.
Several lenders send the money instantly and on the same day as the application, whilst other lenders can take longer to process loans to applicants. Thus, ensure you find a suitable lender that instantly pays out your loan. Based on more than 2 million loans issued, Peachy pays out loans on average, within 15 minutes.
To correctly compare payday loans online, it is vital that borrowers search and read all the information about the potential loans offered.
When applying for a payday loan, remember to always check the following details to ensure you borrow from a trusted provider.
- Loan amount
- The APR
- The total amount you will repay
- The repayment terms
In doing so, it puts you, the borrower in control of your finances, providing access to much-needed credit, and connecting you with payday loan direct lenders that you can trust.
Warning: if you apply for a payday loan online, think carefully before you submit your application and make sure that you are able to pay the debt on time.