Warning: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk.
Please note: High-cost short-term credit is unsuitable for sustained borrowing over long periods and would be expensive as a means of longer-term borrowing.
We all experience times in life when we need money quickly. But, if possible, it’s best to avoid payday loans. Before you start comparing payday and short term lenders, you should make sure you’ve exhausted all other options.
Here’s a handy list of payday loan alternatives, which includes suggestions like deferring your expenses or borrowing from friends, as well as arranging a payment plan with your creditors or requesting an overdraft limit increase.
But if you’ve already considered these and have decided to take out a short term loan, how do you find the best one? Or, with the eye-watering interest rates involved, should that be the least-worst one? We’ve pulled out some top picks from the lenders we work with. But generally, the best loan is the cheapest you can get approved for, and you can use our table to compare typical rates.
Learn more about how we chose our “best” short term lenders
If you need money at extremely short notice, it’s possible to get approved for a loan and receive your funds within minutes. Providers like Lending Stream offer flexible loan amounts, instant decisions, and extremely quick funding, so you can have the money almost immediately. The downside is you might not get the best interest rate available to you.
Representative example: Borrow £200 for 6 months at a rate of 292% p.a. (fixed). Representative 1,333% APR and total payable £386.61 in 6 monthly payments of £64.44.
If you need ongoing access to additional funds but want to avoid the hassle of applying for a new loan, you could consider flexible revolving credit facilities like Drafty. Instead of borrowing a single lump sum, Drafty lets you borrow up to your credit limit (up to £3,000) as often as you want, as long as your account is in good standing and you are on top of repayments. What’s more, you’ll only pay interest on the amount you use.
Representative Example: Assumed credit limit: £1200. Representative 96.2% APR (variable). Annual interest rate 69.4% (variable).
If you have bad credit, it can be hard to get approved for a loan with a traditional lender. However, short term loan companies like QuidMarket might still agree to lend to you even if you have a poor credit history. You could get a loan of up to £1,500 (£600 for new customers) with no additional fees. Note that you will still need to undergo a credit check and meet affordability requirements.
Representative example: Borrow £300 for 3 months - Interest payable £154.38 - Total amount payable: £454.38 in 3 instalments - 3 payments of £151.46 - Representative 1303.10% APR - Interest rate 292% per annum (fixed). Repayment periods are 3 months to 6 months, Additional options may be available to you as a repeat customer. Total Maximum APR 1625.60%
Most payday lenders let you repay early without penalty, but the best lenders only charge interest on the days you borrow, which is a little different. That means that repaying early offers guaranteed savings, which is pretty handy when you could be paying up to 0.8% interest each day.
No, taking out a payday or short term loan will not necessarily ruin your credit score, as long as you repay the loan in full and on time. In fact, if you successfully pay off a short term loan, this can demonstrate to lenders that you are a responsible borrower. This can actually help improve your credit rating.
However, taking out a payday loan that you fail to repay on time, or applying for multiple payday loans, can have a large negative impact on your credit score. So if you need money quickly, it’s important to make sure you’ll be able to pay off your loan in full before you apply. If you don’t, you may find it even harder to get a loan in the future.
Almost all payday loan providers offer their loans online, and many will only let you apply for a loan online and not in person. Most payday lenders let you apply online in minutes and generally give you an instant decision on your application. This makes it’s hard to separate the “best” online payday loan.
Instead, you should look for the payday loan that best suits your financial situation, which generally means the loan that lets you borrow as much as you need, at the best rate, and with favourable repayment terms.
Many of the biggest short term lenders in the UK, such as Wonga and Peachy have ceased trading in the last few years. Here are some of the leading UK payday lenders still offering loans:
Here are 10 simple questions you can ask while searching for a short term loan:
Payday loans should only ever be used as a short-term borrowing solution. If you have bigger money issues or have built up a lot of debt, you should seek advice from a fee-free debt charity such as Citizens Advice or StepChange. They will be able to help you come up with a better solution and get your finances back on track.”
Here are some loan providers you can apply with. Note that the max loan amount is based on the lender’s max amount and will vary based on your state.
Before you apply for a payday loan, ensure that you won’t have problems repaying it. If you think you might struggle to meet your repayments, don’t take out the loan. Late or missed payments usually lead to fees and additional interest, and negatively impact your credit profile. Always work the repayment schedule into your budget, and the best loans will remain the best.
Even the best short term loans can end up costing much more than originally anticipated, especially if you don’t repay your loan on time.
Bear in mind that while the best short term loans will give you quick access to the money you need, there are a number of competing short term loan providers vying for your attention, so compare all your options before applying. And, as mentioned, make sure you’ve considered all of the payday loan alternatives first – payday loans should only be used as a last resort.
We understand that you may be cautious when applying for short term loans. Here are some of the frequent questions our users have asked.
Browse our collection of payday loan guides, designed to answer all of your short term loan questions and help you find the right payday loan.
Updraft lets you avoid the cost of expensive overdraft fees by giving you a low cost loan when you overdraw on your bank account or credit card.
QuidMarket offers an instant decision on loans of up to (or for returning customers) and once approved, you can expect the money in your account on the same day. QuidMarket will consider you for a loan even if you have a bad credit history. Find out how other lenders compare.
If you need to borrow cash quickly and tend to use a prepaid card for regular spending, you may be looking to get a payday loan transferred to your prepaid card.
Fund Ourselves (formerly Welendus) offers flexible and transparent peer-to-peer loans of –, repaid over to . Compare its interest rates, total borrowing costs and eligibility terms against a range of lenders.
The Money Platform is a peer-to-peer (P2P) lending platform that matches investors with borrowers and provides loans of up to . But at it’s core, is it just another short term lender?
Anico Finance is an online lender providing personalised, transparent, short-term loans of – to help cover and spread the cost of an unexpected financial shortfall. Read the full review and compare its rates and eligibility criteria with a range of lenders.
Sunny is an online platform providing clear and transparent short term loans of between – for when unforeseen circumstances pop up. Find out how their lending options compare.
A 1 week payday loan can give you the cash you need until your next paycheck. Learn how it works, what to watch out for, and compare lenders.