Payday Loan FAQ's

1) In order to be approved for a payday loan, will you need to run a credit check?

No, a credit check will not usually be required, as payday loan providers are keen to target customers with poor credit history.

2) What is the maximum amount that I can apply for?

For a first application, you can normally apply for between £80 and £750. For subsequent payday loans, you may be able to apply for up to £1,500, depending on your monthly earnings.

3) Will it be necessary for you to call my employer?

No, there is no need for your employer to be contacted. Recent payslips are adequate evidence of current earnings.

4) Can I be approved even if I only work part-time?

Yes, your payday loan application can be approved if you work part-time, so long as your payslips show that you are in regular employment.

5) Are payday loans the same as personal loans?

A personal loan is a loan from a bank, building society or other financial institution, usually for a period of six months to five years, at a fixed rate of interest. A payday loan is a type of short term, unsecured loan which has little in common with the personal loans offered by traditional financial institutions.

6) Will I be allowed to use my payday loan for any reason that I need?

Some payday loan providers ask potential borrowers why they require a loan, as part of their application procedure. In reality, payday loan providers place few (if any) restrictions on what a payday loan can actually be used for.

7) Can I apply by phone?

Some payday loan providers will accept applications by phone, although they will usually require proof of identity and evidence of earnings to be provided either online or by fax.

8) What if I can't pay?

Many lenders will allow payday loans to be 'rolled over', as long as a partial repayment is made. Because of the high rates of interest charged, payday loans are not recommended as a method of long term borrowing. If a payday loan debt persists, the lender will usually hand it over to a debt collection agency to pursue.

9) What action can be taken by companies for default?

If you default on a payday loan, the lender will probably call in a debt collection agency to reclaim the money. Alternatively, the lender might try to recover the debt via the Small Claims Court.

10) Is the industry regulated?

The payday loan sector is very lightly regulated in the UK. However, a payday loan provider must have been issued with a consumer credit licence, in order to trade legally.

11) Where can I go to get help with non-payment of a payday loan?

Your local Citizens' Advice Bureau (CAB) should be able to advise you about loan repayment issues and alternative sources of loan finance. The Consumer Credit Counselling Service (www.cccs.co.uk) also offers advice for people with debt problems.

12) Who can I complain to about a bad company?

Making complaints about payday loan providers can be difficult because of the lack of regulation in the UK. You might consider contacting the Office of Fair Trading (OFT) which deals with consumer credit licensing.

13) Does getting a payday loan improve my credit score or rating?

In the short term, taking out a payday loan is unlikely to have any effect on your credit rating as providers rarely make checks with credit ratings agencies. However, if you default on your payday loan it is possible that this information might find its way on to your credit record.

14) Are there checks I can perform on lenders?

You can check with the OFT whether a lender has a consumer credit licence. Otherwise, it can be difficult to obtain information about lenders, particularly those overseas payday loan companies that operate solely via the internet.