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Be smart with your finances. Payday loans can lead to serious debt.
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<h1 class="caption sfl big_white" data-x="62" data-y="60" data-speed="600" data-start="1300" data-easing="easeOutExpo">Payday Loans: What Do I Need to Know?</h1>
<div class="caption sfl small_white" data-x="62" data-y="125" data-speed="600" data-start="1300" data-easing="easeOutExpo">A payday loan may seem like a quick fix<br />
for short-term money problems, but it can <br />
lead to long-term debt. Learn the facts and <br />
explore cheaper alternatives that can allow <br />
you to avoid payday loans. </div>
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<h2 class="center">Considering a payday loan? Get advice first.</h2>
<div class="intro center">Payday loans are an expensive form of short-term credit used by many as a source of fast cash. Although these loans are meant to be paid back by next payday, many people cannot afford to do so and are forced to rollover the loan, leading to an ever-mounting cycle of debt. Don't fall for the payday loan trap.</div>
<div class="payday_stats">
<h3>Payday Loans vs Other Consumer Spending</h3>
<center><p class="counter">In the last <b class="timer" id="infinity" data-from="0" data-to="1" data-speed="1000" style="color:#000"></b> seconds...</p></center>
<table style="width:86%;margin-left:8%;">
<tr class="payday_table">
<td><img src="../payday-loans-guide/style/images/payday.png"></td><td><p class="table-item">Payday Loan Lending:</p></td> <td>£<span class="timer" id="value" data-from="0" data-to="2800000000" data-speed="31556900000"></span></td></tr>
<tr class="payday_table"><td><img src="../payday-loans-guide/style/images/church.png"></td><td><p class="table-item">Donated to Religious Causes:</p></td> <td>£<span class="timer" id="cancer" data-from="0" data-to="1581000000" data-speed="31556900000"></span></td></tr>
<tr class="payday_table"><td><img src="../payday-loans-guide/style/images/mobile.png"></td><td><p class="table-item">Spent on Mobile Gaming:</p></td> <td>£<span class="timer" id="gaming" data-from="0" data-to="1560000000" data-speed="31556900000"></span></td></tr>
<tr class="payday_table"><td><img src="../payday-loans-guide/style/images/fish.png"></td><td><p class="table-item">Spent on Fish and Chips:</p></td> <td>£<span class="timer" id="fish" data-from="0" data-to="1200000000" data-speed="31556900000"></span></td></tr>
<tr class="payday_table"><td><img src="../payday-loans-guide/style/images/cinema.png"></td><td><p class="table-item">Spent on Cinema:</p></td> <td>£<span class="timer" id="cinema" data-from="0" data-to="945100000" data-speed="31556900000"></span></td></tr>
<tr class="payday_table"><td><img src="../payday-loans-guide/style/images/tea.png"></td><td><p class="table-item">Spent on Tea:</p></td> <td>£<span class="timer" id="tea" data-from="0" data-to="655000000" data-speed="31556900000"></span></td></tr>
<tr class="payday_table"><td><img src="../payday-loans-guide/style/images/parking.png"></td><td><p class="table-item">Spent on Parking Fines:</p></td> <td>£<span class="timer" id="cancer" data-from="0" data-to="234000000" data-speed="31556900000"></span></td></tr>
</table>
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<a class="references_link">References</a>
<div class="references">
(1) £2.8 billion in payday loans in 2012 - http://bit.ly/1nUoLun <br />
(2) £1.581 billion donated to religious causes in 2011/12 - http://bit.ly/1yDsqQF <br />
(3) ~£1.56 billion spent on mobile games in 2018 - http://bit.ly/1ql9k1p <br />
(4) £1.2 billion spent on fish and chips annually - http://bit.ly/1yDsCiO <br />
(5) £945.1 million spent on cinema tickets in 2012 - http://bit.ly/1u0z7NU <br />
(6) £655 million spent on tea annually - http://bit.ly/WnBtYp <br />
(7) £234 million spent on parking tickets in 2011 - http://bit.ly/Ugl3j4
</div></div>
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<li class="tab"><a href="#tab-1">Must-Know Facts</a></li>
<li class="tab"><a href="#tab-2">Alternatives</a></li>
<li class="tab"><a href="#tab-3">Still Considering a Payday Loan?</a></li>
<li class="tab"><a href="#tab-4">Get Advice</a></li>
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<div id="tab-1"> <img src="../payday-loans-guide/style/images/art/debt.png" alt="" class="alignleft" style="margin-top:50px;padding-bottom:365px;max-height:275px;" />
<h3>Things to Consider</h3>
<p>Before taking out a payday loan, be aware of these important facts.</p>
<ol>
<li><h4>Payday lenders profit tremendously from people not paying back on time.</h4></li>
<p class="body">Half of the money lenders bring in comes from the 28% of loans that are not paid back on time and are rolled over. If you have already taken out a payday loan, don't be tempted by your lenders seemingly generous offer to extend your loan until next month -- it can become a vicious debt trap.</p>
<li><h4>Payday loans may harm your credit rating.</h4></li>
<p class="body">While no payday lender will admit to this (and they may even argue that the loan can <i>improve</i> your credit score), evidence has shown that some mortgage lenders are weary of lending money to payday loan borrowers, even if they paid it off on time.</p>
<li><h4>The payday industry is rapidly growing.</h4></li>
<p class="body">The payday loan market size has been estimated at around £2.2 billion in the 2011-2012 financial year. This is up from an estimated £900 million in the 2008-2009 financial year. Over 8 million payday loans were taken out in 2011-2012. In this same period, StepChange reported an over 120% increase in the number of people they helped with payday loan debts.</p>
<li><h4>A payday loan in the UK is much more expensive than in other developed countries.</h4></li>
<p class="body">The majority of lenders in the UK have a representative APR of 1,500%-3,000%, with one of the most prominent lenders, Wonga, having an APR of 5,853%. In comparison, most of Australia has capped the APR at 48%, and most states in America have APRs around 300%-500%.</p>
<li><h4>There are numerous cheaper, less risky alternatives to payday loans.</h4></li>
<p class="body">Take your time and consider all of your options before contacting a payday lender. Review our list of payday loan alternatives by clicking on the tab above.</p>
</ol>
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<div id="tab-2"> <img src="../payday-loans-guide/style/images/art/alternatives.png" alt="" class="alignright" />
<h3>Alternatives to Payday Loans</h3>
<p>A payday loan should be avoided in most circumstances. Review your options below for when you are short on cash.</p>
<ul>
<li><p class="list"><b>Visit your credit union.</b> Loans from your local credit union are much cheaper than payday loans, with a typical APR of around 10-30%.</p></li>
<li><p class="list"><b>Cut back on your spending.</b> Look for ways to reduce your spending on things you don't absolutely need.</p></li>
<li><p class="list"><b>Seek help from family and friends.</b> When in a pinch, those closest to you are a source of help that you shouldn't ignore.</p></li>
<li><p class="list"><b>Sell unwanted possessions.</b> Take a look around your home for items you no longer need and sell them for much-needed cash.</p></li>
<li><p class="list"><b>Get advice on your debts.</b> Visit a local debt advice centre, such as Citizen's Advice or StepChange, for impartial advice on your debts.</p></li>
</ul>
<div class="clear"></div>
</div>
<div id="tab-3"> <img src="../payday-loans-guide/style/images/art/apr.png" alt="" class="alignleft" />
<h3>Best Payday Loan Options</h3>
<p>Before continuing, go back and read over your alternatives one more time. If you're still looking to take out a payday loan, make sure you will be able to repay the loan on time, and then review our list of the best payday lenders below.</p>
<ul>
<li><p class="list"><a href="http://www.cuok.co.uk/"><b>CUOK Pay Day Loans</b></a>. Although it is only available to those who live or work in central London, a CUOK loan from the London Mutual Credit Union is the best option for those looking to take out a payday loan. With a representative APR of 42.6% and a total repayment of only £103 for £100 borrowed, it is over 8 times cheaper than loans from other traditional payday lenders. CUOK also allows a repayment period of up to 3 months, whereas most other lenders allow a maximum of one month.</p></li>
</ul>
<p>For those who are unable to take out a loan from CUOK, we will update this area with any other best options as they become available.</p>
<div class="clear"></div>
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<div id="tab-4"> <img src="../payday-loans-guide/style/images/art/help.png" alt="" class="alignleft" />
<h3>Where to Get Advice</h3>
<p>Fortunately, there are many places you can go if you are struggling to manage your finances or suffering from debt. The organisations below can provide you with free and unbiased debt advice, so you can sort out your finances and avoid taking out a payday loan.</p>
<ul>
<li><p class="list"><a href="http://www.stepchange.org/"><b>StepChange Debt Charity</b></a>. Provides free advice, counselling, and a suite of tools to help you reduce your debt and repair your finances.</p></li>
<li><p class="list"><a href="http://www.citizensadvice.org.uk/"><b>Citizens Advice</b></a>. Visit your local CAB office for free help with debt management, welfare, housing, employment, consumer complaints, and other issues.</p></li>
<li><p class="list"><a href="http://www.nationaldebtline.co.uk/"><b>National Debtline</b></a>. You can call National Debtline for free debt advice. Their services cover England, Wales, and Scotland.</p></li>
<li><p class="list"><a href="https://www.moneyadviceservice.org.uk/"><b>Money Advice Service</b></a>. An independent organisation set up by government that provides free and impartial money advice.</p></li>
</ul>
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<h2 class="center">New rules to protect consumers from payday loans.</h2>
<div class="intro center">Beginning in April 2018, the Financial Conduct Authority (FCA) is now regulating the entire consumer credit market, including payday loans. Read about how this may affect you in <a href="../blog/fca-regulation-payday-industry-means-consumers/">our blog post</a>.</div>
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<h3>Related Guides</h3>
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<li>
<h4><a href="../loans/payday-loan/guides/dealing-aggressive-debt-collection-tactics-continuous-payment-authority/">Dealing with aggressive debt collection tactics through a Continuous Payment Authority</a></h4>
</li>
<li>
<h4><a href="../loans/payday-loan/guides/payday-loan-market-uk-compares-nations/">How the payday loan market in the UK compares to other nations</a></h4>
</li>
<li>
<h4><a href="../loans/payday-loan/guides/understanding-payday-loan-code-conduct/">Understanding the payday loan code of conduct</a></h4>
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<h4><a href="../loans/payday-loan/calculators/payday-loan-repayment/">Payday loan repayment</a></h4>
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<h3>Industry Report</h3>
<h6><a href="../loans/payday-loan/industry-report/">Payday Loans industry report</a></h6>
<p>Read about the current state of the payday loan industry in our comprehensive report.</p>
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