Payday Loans – Finding the best rates of 2016

Rates for payday loans are at an all time low, with more lenders than ever before, the competition among the UK’s biggest finance companies continues to increase. Since the birth of payday loans in 2008, interest rates have almost halved as a result of the added competition and new regulations that have since come into play.

The introduction of online loans opened a whole new gateway for UK consumers to shop around many different lenders in order to find the best possible deals. Shopping around for any item or service can be quite a time consuming task, whether its for a new car, insurance quotes or a savings account the process is relatively similar.

Here at Payday Pixie our customers are at the forefront of everything we do, we understand the importance of providing a fast and accurate service for those in need of financial assistance. We recognize that many individuals that use our service are facing financial insecurities and we do not wish to add to those problems by charging high interest rates and difficult payment terms.

Our online loans service is designed to make the payday loan application process as simple and stress free as possible.

We always recommend shopping around in order to find the best deal to personally suit your financial situation, so we have done the hard work for you. Compare all the major lenders in our APR chart below and see how Payday Pixie compares with many other payday lenders.

How do our payday loans compare to other lenders?

Best Payday Loans Rates

Lender Maximum Loan Amount APR
Payday Pixie £2,000 728.9% APR
Sunny Loans £950 1295% APR
Quick Quid £1000 1270% APR
Wizz Cash £1000 1265% APR
Wonga £400 1509% APR

 

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Steering clear of loan sharks

Loan sharks have been around for many years, since the ages where borrowing money first appeared among the Ancient Greeks to the modern day era of today. With the introduction and growth of payday loans back in 2007, loan sharks saw this as a new opportunity and challenge to collect as much personal information and bank details from individuals as possible.

Loan sharks would pose as a payday loans lender either through a website or an email that would encourage users to apply for a payday loan with the promise of guaranteed funds. Once an individual had uploaded their bank account details the loan sharks would automatically withdraw a sum of money from the account, usually ranging from £30 – £60.

The £30 – £60 that would be deducted from an individuals account would be called an “administration fee” by the sharks or in other words theft, fraud, robbery. The internet provides a whole new gateway to potential fraudsters and sharks and with the rising numbers of people opting to apply for loans online, the number of potential victims is massive.

There are certain steps that you can take to easily identify a loan shark/fraudster, especially online.

Here is our 3 step check:

  • FCA License Number – The Financial Conduct Authority regulate the entire finance industry within the UK. Once a company has gained the approval by the FCA they will be provided with a Consumer Credit License Number which will look like this – ZA152869. If you are unable to find a license number on a financial website this business/individual has not been authorized by the FCA.
  • Online Reviews – It is always a smart move to google a company to find any negative or positive reviews about a certain website/business. This will give you an insight on previous customers experiences with the website/business.
  • APR & Interest Rates – Before applying for any sort of additional funding ALWAYS look at the APR and Interest rates before you enter an agreement with the lender in question. Loan sharks will try and hide APR and Interest rates from clear view, or make it seem to good to be true. Always go with your gut instinct, if its too good to be true, it usually is.

 

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Best way to borrow money until payday?

Using your bank Overdraft 

Using an overdraft could be an easy option of borrowing money over a short period of time instead as an alternative to payday loans if you have something to pay for as this service allows users to repay the money they then owe on flexible terms.

That being said once you go into your overdraft you may find it difficult to pay back what you owe if you’re not in full control of your finances and then an overdraft could be like financial quick sand constantly leave you stuck in the same place. It also doesn’t help with the high interest rates that a lot of overdrafts have set as they tend to be noticeably higher than your every day credit card rates, adding to the cost of your purchase considerably.

First things first you need to make sure you’re fully aware of how much you will be charged for the use of your overdraft to avoid being caught out by charges you weren’t aware of. A good way to keep on top of this is by making a payment plan for yourself to help repay what you owe as soon as possible.

Another important point is to check that your authorized overdraft credit limit is enough to cover the purchase or amount it is you need to borrow or else you may end up being stung by extra fees and charges which could cause damage to your credit rating.

If you find that you haven’t the funds to make your purchase and still don’t have the sufficient credit limit for your purchase including using your agreed overdraft then it may well be worth using some of your overdraft and paying some on your credit card if you have one handy with sufficient credit available.

There are many ways of obtaining money for a small period such as a credit card, overdraft, payday loan and even if you need it over an extended length of time short term loans but we strongly advise you look at all options finding one best suited for your needs before jumping into any agreements.

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Are Credit Cards always the cheapest option?

Credit Cards

Using credit cards can be a fast and helpful way to borrow money for a short period of time interest free instead of making your main focus applying for payday loans be sure to research other options.

Unlike a short term loan a lot of credit cards will offer around a 45-59 day period before applying interest, so if you need to borrow money before payday you will be able to borrow within that period at no extra cost if you are sure to repay the debt before that period runs out.

If you’re not able to clear the balance within that time you may end up being charged the higher standard interest rate which could land you in a worse position than you started, this may resort in a credit card not being the best option for you.

You will also have to look out for a credit card which is more suited to how you plan on taking money from it, if you’re planning on making a purchase on your credit card finding a card which offers 0% or low interest rate on purchases is best. You can apply for credit cards which will offer introductory 0% rate for several months on purchases.

If its cash you are planning on borrowing then credit cards will offer money transfers into your personal account but be sure to check that your credit card offers a 0% deal on money transfers so you’re able to access the money at a minimal cost or you may end up paying the interest you don’t want.

Money transfers aside, try to avoid withdrawing cash from your credit card as from the moment the ATM dispenses the cash you’re more than likely to incur significant charges and end up paying an extortionate rate of interest.

Some credit cards offer 0% balance transfers allowing you to clear the debt on another card (based on limit of credit) if this is why you need the money it is always a good option if you wasn’t able to clear the amount borrowed as soon as you had hoped.

There are many guides out there on choosing the cheapest credit card for your circumstances so its definitely a good idea to do your research first to find the best credit card for you.

Alternatively if you have already looked into credit cards and can’t find one which suits your needs, payday loans could be the option for you.

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40% of Students have taken out Payday Loans

Over 40% of UK Consumers between the ages of 18 and 30 have turned to payday loans as a means of finance with young males more likely to borrow than women. The figure released by the Financial Ombudsman Service states the growing cost of living and higher university fees recently imposed by many leading universities as the main factor of the sudden increase in borrowing within the younger generation of borrowers.

The huge increase in University fees has seen many students who fall into the 18-30 age category, turn to other options of finance such as payday loans and Pawnbroker services to help with monthly outgoings such as phone bills and student accommodation rental fees. More than half of the Universities in Britain charge maximum annual tuition fees of £9000 with the average UK student expected to hit debts of up to £44,000 by the time they graduate.

Under recent government reforms university graduates are expected to repay approximately 9% of their gross income over a certain level (£21,000) until either the full amount has been repaid or a set amount of time has elapsed (25 years). For most, the consequence will entail much higher repayments for a longer period of time which will continue far into the future for many graduates.

With the UK average salary hovering around £26,500 , someone earning this amount would be required to give up 9% of this just for university fee repayments which equated to approximately £2,500 per year.

Payday loans for students continue to grow in popularity with 30% more turning to them as a faster and more efficient way of finance. Banks are reluctant to lend to students due to the already huge university fee debts that students will automatically inherit which is why payday loans and pawnbrokers have also seen a recent surge in popularity throughout 2015.

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The Benefits of an Overdraft

The benefits of an Overdraft compared to Payday Loans

An Overdraft, in effect is a credit agreement with yourself and your bank/building society which allows you to spend more money than you actually have in order to cover short term finances. Overdrafts have recently become a popular choice for many individuals who have a lower bank balance than normal, the overdraft acts as a sort of financial cushion should unexpected finances be debited from your account.

Payday loans are another popular choice in order to cover short term finances and any one off unexpected bills such as car repairs, home improvements and provide a bit more of financial flexibility of your bank account.

In comparison to payday loans, an overdraft facility provided by your bank will work out a lot cheaper, however not everyone is entitled to one or will find it easy getting the bank to agree to providing an overdraft. An application will need to be made to your bank who will then assess your previous bank balance and account history to decide whether an overdraft would be the best approach for you, the whole process can potentially take a full week.

In many cases banks will reject the application, mainly if an individual is consistently overdrawn or already operating in a current overdraft facility. Should this be the case banks will usually suggest another form of finance in order to cover the unexpected finances that you are facing such as short term loans

The benefit of taking out a payday loan is that they are ideal to cover emergency finances due to their instant approvals and very fast cash transfers which in comparison to the lengthy approval process that exists at many banks makes them a highly favorable choice.

Although overdrafts are the cheaper option for many individuals the time it takes to have your application approved proves costly to those facing emergency outgoings and unexpected bills which is why payday loans remain a very popular choice with UK consumers.

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Am I Eligible for a Payday Loan?

When applying for a payday loan there are things that must be taken into consideration before agreeing to take out any sort of finance. The payday loans industry is a very highly regulated industry which means that applicants need to go through a rigorous application process to ensure that they are eligible to be accepted for any sort of finance provided by a UK Lender.

Are you a UK Resident and aged 18 or over?

If you are applying for any type of loan, you must be a UK resident aged 18 or over. Applicants applying for any sort of financial aid from a UK lender will also need to have a full active UK bank account in which they are regularly paid into.

All applicants need to be aged 18 or over which is the legal age that an individual is required to be in order to apply for any sort of finance.

Do you have a valid UK address and Bank Account?

Any applicant will be required to have a valid UK Bank account and place of residence. Providing this information will enable any lender to transfer funds directly into your UK bank account. The UK Address information will be used to ensure that you are the person in control of the bank account.

Do you regularly receive an income?

All applicants need to prove that they are capable of paying back any money that has been borrowed. In order to pay back any borrowed funds, individuals must have a regular income in which they are able to cover the repayments on their payday loans. Many payday loan lenders accept individuals that are currently claiming benefits.

Ensuring that you meet the eligibility checks set by many of the UK’s leading lenders you should ensure that you have the funds necessary to pay back any borrowed finance. Failure to cover monthly repayments can potentially have a negative effect on your credit rating which could prevent banks and other lenders providing you with any additional finance in the future.

Many lenders offer same day payday loans so take your time and review your options before committing to taking out any sort of finance or loan.

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London is the UK Payday Loans Capital

London has officially got the highest cost of living out of any other UK city with the average house priced at a huge £548,000. London is also the payday loans capital of the UK with recent figures showing that Londoners are 60% more likely to take out a payday loan and other forms of credit such as a credit card or overdraft facility.

With the cost of London living continuing to increase at a faster rate than the average salary, it is no surprise to leading UK Economists that other forms of financial support and credit are needed for more than 60% of London residents. A huge factor in the number of payday loans that get processed every day in the UK Capital is the simplicity of the online application process and speed in which applicants are able to receive their funds. With the average payday loan application taking just 5 minutes and bank cash transfers an additional 15 minutes, this seems to be the fastest and most popular way for busy working class families to access additional finance as opposed to the lengthy process provided by many high street banks.

Many UK Lenders provide a same day payday loans service which is why approximately 8 out of 10 people have turned to payday loans within the last 2 years. Reports on what UK consumers are using payday loans for vary from simple car repairs and unexpected bills to debt consolidation. The most surprising statistic was that one of the most common uses for applicants taking out a payday loan was to cover the funeral costs for a loved one which in recent weeks has raised questions regarding the escalating funeral costs over the last 12 months.

Payday loans have never been more affordable to UK consumers due to the highly competitive market and very strict lending regulations which have seen many leading lenders offer lower interest rates than seen in previous years.

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