How to compare payday loans
Are payday loans right for me?
Before comparing different payday loans and payday lenders, it's important to know whether or not taking one out is the right decision at all. Payday loans can be tough for some people to repay, as they're lent for such a short period of time. It may be worth looking at alternatives to payday loans first.
Lending Stream - an alternative to payday loans
Warning: Late repayment can cause you serious money problems.
For help, go to moneyhelper.org.uk.
Understanding how payday loans work
When you apply, you'll be asked for your debit card details, so that repayment can be arranged automatically. The amount you repay varies depending on the lender and how long you take the loan out for - it can be as little as a day or two or up to three months.
APR is confusing, but important
Each lender is required by law to display their ‘Representative APR'. APR is an Annual Percentage Rate, which is designed to help you compare payday loans and other types of credit. The idea is that each APR shows what that loan would cost if you took it out for a year on the same terms.
The type of APR lenders have to show is a ‘Representative APR'. This means that it's the APR on loans that at least 51% of successful applicants would be offered (as some lenders have a range of interest rates, depending on your ability to repay).
These things can make the APR (or Representative APR) on short-term loans confusing. Because they're for such a short period of time, the percentage rate is multiplied many times to reach an annual figure. This means the APR for most payday loans and other short-term loans reach hundreds or thousands of percent.
It may be easier to figure out what you would repay on a daily basis, and comparing potential loans that way. You could also just look at the amount you repay and how realistic the repayment schedule is.
What to bear in mind when comparing payday loans
Bear in mind that the longer a loan is for, the lower the representative APR will be if you're repaying the same amount - so make sure you're comparing like for like. If you don't, you may end up with a loan that actually costs more overall, especially once you take into account interest and fees for things like extra repayments. Look for representative examples, which lenders have to display.
However, it's also worth remembering that some payday loans and short-term loans are for a longer period of time, with multiple repayments (each of which are for smaller amounts). You might find it easier to repay a loan that is split into instalments.
Payday loan comparison sites
Some comparison sites won’t show payday loans. If you can’t find a comparison table on one site, you may need to turn to your favourite search engine to find one.
Payday loan brokers (and how they can look like comparison sites)
There are a number of payday loan brokers, some of whom offer to compare payday loans. Brokers work with lenders and are paid according to the number of customers they send them. When you apply, you give your information to the broker and they ‘match' you to a lender, based on your affordability and which lenders are interested in you.
While they mostly don't exist anymore, be careful of any brokers that charge you in order to apply. This used to be a popular scam - you'd pay a fee, and in return they would guarantee to find you a loan offer. The problem was usually for people who were struggling to be accepted. They'd be offered a loan at particularly high cost, but since they'd been offered it, they couldn't then get a refund from the broker.
If you decide to borrow from Lending Stream, know that we’ll never charge you a fee to apply or take out a loan.
Compare payday loans with alternatives
There are also ‘lines of credit', which are a new offer by some lenders. These work by giving you access to an amount of credit, that you can use and repay as you wish. It works a little like an overdraft, except it isn't tied directly to your bank account. While Lending Stream doesn't offer this option, our sister site ‘Drafty' does! More about Drafty.
Compare Lending Stream
Related Loans
We don't offer loans under 60 days. We offer 6 or 12 month loans. The maximum repayment period is 12 months. Maximum APR 1721%.
Representative Example: Given a Representative APR of 1333%, if you borrow £200 over 6 months at 292.0% p.a. (fixed), you would owe 6 equal repayments of £64.44. You will repay £386.61 in total.
Warning: Late repayment can cause you serious money problems. For help go to moneyhelper.org.uk