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Payday Loans in the UK | Infographic

Payday Loans

How They Work, What They Cost?

Taking out a payday loan is easy, but what about the repayment?

These high-cost short-term loans are typically meant to be repaid on the next paycheck of the borrower.

Research by the financial watchdog of the United Kingdom, the Financial Conduct Authority (FCA) shows that 37% of payday loan borrowers and 29% of short-term instalment borrowers are aged 25-34.

In January 2015, the FCA introduced capping charges for this popular yet controversial credit product.

Let’s look at the changes in the market since these implementations were brought in:

 

Maximise your options: Compare and apply for loans below with LoanTube

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Representative APR
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Loan Amount

£4000 -

£20000

Norwich Trust

Loan Term

1 -

10 years

4.8/5

4.8/5

Representative APR

31.90%

Minimum Age

21 Years

Minimum Income

£2000 per month

Representative Example: £12,000 over 66 months, 31.9% APR fixed. Monthly payment £358.22 Annual interest rate 28.01% fixed. Interest payable £11,642.52. Total repayable £23,642.52.

4.8/5

4.8/5

Norwich Trust

Loan Amount

£4000 -

£20000

Loan Term

1 -

10 years

Representative APR

31.90%

Minimum Age

21 Years

Minimum Income

£2000 per month

Representative Example: £12,000 over 66 months, 31.9% APR fixed. Monthly payment £358.22 Annual interest rate 28.01% fixed. Interest payable £11,642.52. Total repayable £23,642.52.

Loan Amount

£5000 -

£100000

Evolution Money Loans

Loan Term

1 -

20 years

4.5/5

4.5/5

Representative APR

28.96%

Minimum Age

18 years

Minimum Income

Not mentioned

Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00

4.5/5

4.5/5

Evolution Money Loans

Loan Amount

£5000 -

£100000

Loan Term

1 -

20 years

Representative APR

28.96%

Minimum Age

18 years

Minimum Income

Not mentioned

Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00

Loan Amount

£1000 -

£10000

1Plus1 Guarantor Loans

Loan Term

1 -

5 years

4.4/5

4.4/5

Representative APR

39.90%

Minimum Age

18 years

Minimum Income

Not mentioned

Representative Example: Borrowing £3000 over 36 months with a representative APR of 39.9% (variable),the amount payable would be £134.21 a month,with a total cost of credit of £1831.56 and a total amount payable of £4831.56.

4.4/5

4.4/5

1Plus1 Guarantor Loans

Loan Amount

£1000 -

£10000

Loan Term

1 -

5 years

Representative APR

39.90%

Minimum Age

18 years

Minimum Income

Not mentioned

Representative Example: Borrowing £3000 over 36 months with a representative APR of 39.9% (variable),the amount payable would be £134.21 a month,with a total cost of credit of £1831.56 and a total amount payable of £4831.56.

Payday Loans: The Most Controversial and Revolutionized Credit Product

Payday loans are a relatively small amount of money borrowed over a short period at a high-interest rate. Traditionally, this loan was lent for a period of 30 days, however, lenders now lend these loans for a period
ranging from 2 months to a year. Therefore, these loans fall into the category of high-cost short-term Loan. These are unsecured loans with an annual percentage interest rate (APR) of 100% or more.

High-cost short-term Price Capping

Interest and fees charged must not exceed 0.8% per day of the amount borrowed.

If borrowers default, fees must not exceed £15.

Borrowers must never pay more in fees and interest than 100% of what they borrowed.

Loan Market Across the UK

This map shows different markets across the UK with the number of loans taken per geographical region from July 2017 to June 2018.

Credit and Debt

Statistics in the UK

75% of UK adults have had one or more consumer credit products or loans in the last 12 months.

3.1 million UK adults have one or more high-cost loans in the last 12 months.

3.6 million UK adults are borrowing from friends and family.

0.1 million UK adults are borrowing from unregistered lenders.

Current Trends
in the Market

Over 5.4 million loans were made till 30 June 2018

On average, borrowers are due to repay 1.65 times the amount they borrowed

Highest number of loans per head of adult population (125 per 1,000): North West

Lowest number of loans per head of adult population (74 per 1,000): Northern Ireland

 

Age Distribution of HCSTC Borrowers

The data shows that 60% of payday loan borrowers and 45% of short-term instalment loan borrowers were female. 18% of all UK adults with a payday loan are 18-24 year olds. 49% of UK adults aged 65 and over have State Pension as the main source of income. Hence, a sharp decline in the loan amount for that particular age group can be observed from the graph.

How to Maintain

credit

Credit Score While Borrowing?

There are several benefits of maintaining a good credit score such as having the benefit of being offered a lower interest rate on the loans that one opts for. A good credit score helps an individual to save money on a wide range of services. LoanTube has listed a few tips to help maintain the credit score to be fit and in shape:

Pay Box

Keep paying bills on time. Any bill, if unpaid, could wind up on your credit report.

creditBox

Refrain from applying for new credit as multiple credit checks also impact the ratings.

know Box

Know your credit report inside out. A single error can lead to a drop in the score.

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Manage your debt efficiently and responsibly. Lower the debt, higher is the credit score.

 

Representative 79.5% APR

Warning: Late repayment can cause you serious money problems. For more information, go to moneyhelper.org.uk

Credit subject to status & affordability assessment by Lenders.

LoanTube is a credit broker and not a lender.

Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on any debt secured against it.

Other Resources

Representative APR Example

The rate you are offered will depend on your individual circumstances.

Representative APR Example: On an assumed loan amount of £1,000 over 18 months. Rate of interest 59.97% per annum (fixed). Representative 79.5% APR. Total amount payable £1,554.10 of which £554.10 is interest. 17 equal monthly repayments of £86.09, and the final month’s payment of £90.57.

Some of the offered loans might be classed as High Cost Short Term Loans. APR rate starts from 18.22%. The maximum APR rate is 1721%, but you will get a personalised rate tailored to you. The minimum repayment term is 3 months, the maximum repayment term is 7 years. The minimum loan amount is £250 and the maximum loan amount is £35000.

Warning: Late repayment can cause you serious money problems. For more information, go to moneyhelper.org.uk

Credit subject to status & affordability assessment by Lenders.

LoanTube is a credit broker and not a lender.

Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on any debt secured against it.

Not all borrowers will qualify for a loan. The operator of this website does not engage in any direct consumer lending, we simply provide you a FREE loan brokering service. This means LoanTube does not charge customers a fee for using its introducer services, but it receives a commission from lenders or other brokers if a customer enters into a consumer credit agreement with them following an introduction by LoanTube.

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