Taking out a payday loan is a big step. Sadly many people don't take extra care when shopping around for a payday loan lender. They sign up with the first company they find, and soon find out that they've landed in a trap.
However, many payday loan lenders in the UK are reputable and it's unlikely you'll find a dodgy one, unless you're really unlucky.
Your biggest concern when you compare payday loans should be the terms you will sign. And we will discuss some of these now:
The standard charge for a Â£100 loan in the United Kingdom is Â£25. So for every Â£100 you borrow you'll repay Â£125 on your next payday. But there're a few lenders who charge Â£20 for every Â£100 borrowed and this could save you a lot of money, especially if you regularly take out a loan.
Then there're lenders who charge much highe r fees like Wonga.com which charges Â£36.72 for every Â£100 you borrow.
Broker vs. Lender
When you compare payday loans, you should be aware of the lenders from the brokers. Some well-known loan companies are not actually lenders, but are brokers. The advantage with many of these brokers is that they instantly send your application to all the leading lenders and you get an instant decision.
So this means you don't have to visit the website of each lender in the market and waste time reviewing their services. The payday broker does this for you and the best lender for your needs approves your loan. Payday Power is one such broker, with a partnership with all the leading lenders in the UK. And they send your application to over 25 lenders instantly.
Not many people are aware that some payday lenders provide discount codes. These help you to save on your application for a payday loan. Quick Quid is o ne leading lender that regularly helps its applicants save on their loan by providing a 25% discount code off the initial charge.
Most payday lenders will provide you with a loan between Â£80 and Â£750. But your first loan won't be as high as Â£750, but somewhere near Â£200. Of course this will vary from lender to lender and some won't approve you for more than Â£150 the first time.
Some lenders are more generous and on your initial application will lend you about Â£300. The obvious reason for such low amounts is that they want to ensure you can successfully manage your loan; and on subsequent loans this amount will be increased subject to a good history.
There're also lenders like Lending Stream who lend you up to Â£1000; much higher than the industry average.
This may be trivial to some borrowers but it can be handy for the less experienced and regular borrowers.
The loan sl ider has two elements to it: the loan amount and the length of time in days. You use the slider to find out how much you'll pay on any amount you look to borrow in relation to the number of days of the loan.Wonga.com has one of the best sliders in the industry, that provides you with a clearer view of what you'll repay - so there's no guesswork involved.
There're many other factors to look at when you compare payday loans. And they are equally important as the one's listed above. These factors include Representative APR, approval rates, minimum requirements and so on.
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