Frequently Asked Questions About Pay Day Loans

Are companies who offer pay day loans regulated?

Unfortunately there isn’t a great deal of regulation for lenders who offer pay day loans. However, any lender who provides pay day loans must first have a Consumer Credit License which is issued by the Office of Fair Trading, this really is the only requirement. Some Lenders are members of British Cheque and Credit Association (BCCA). This organisation has a set code of practice must be adhered to by their members. One thing that they do discourage is the rolling over of pay day loans. This is mainly due to the high interest rates which are charged on these short term loans. If a pay day loan can not be repaid over the short term it may be advisable to consider alternative personal loan options.

What is APR?

APR or Annual Percentage Rate, refers to the amount of interest which is charged, assuming that the interest was charged yearly. So, on a loan of £100 with an APR of 6%, the interest payable per year would be £6. Most pay day loan companies tend to focus on actual amounts, ie; for every £50 borrowed, £57 is repaid at the end of the loan which means the loan cost £7.

What is the difference between a personal loan and a pay day loan?

The main differences between a personal loan and a pay day loan are;

• Application time for a pay day loan is often much quicker.
• Funds can become available the same day in many cases with pay day loans. Whereas personal loans can take a few days or more.
• The lenders are more concerned with the applicant’s ability to repay the pay day loan, whereas lenders for personal loans place more emphasis on the applicant’s past credit history.
• Interest rates are often much higher for pay day loans.

Download the Pay Day Loans PDF Guide here - see our other free PDF guides here

Guide Contents

What are pay day loans
Shopping around for the best pay day loan
Apply for a pay day loan
Frequently asked questions about pay day loans
Where to get more help and further information about pay day loans

main menu << previous page  next page >>