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Since 2014 payday loan lenders come under the authority of the FCA (The Financial Conduct Authority)

Since 2014 payday loan lenders come under the authority of the FCA (The Financial Conduct Authority)

Is a payday loan safe?

As with any transaction performed online, there are always some people with reservations regarding security. Because online shopping, banking, and loans are still relatively new for some people, many are naturally cautious about giving their banking details online. While this is, of course, understandable, modern technology and security practices have helped create incredibly secure systems that are helping to eliminate such concerns.

Many new payday loan lenders in the UK are now able to guarantee that any details you give online will remain completely private; helping to provide you with important peace-of-mind. As a result of such breakthroughs in data protection, online loans can now claim a reputation every bit as trusted and secure as traditional methods. Always striving to provide customers with instant access to some of the very best loans available, we do all we possibly can to help you get quick, convenient access to payday loans. We are working with the largest and most trustworthy direct lenders found in the UK.

Are payday loans regulated?

Yes. The Consumer Credit Act 1974 also means all lenders must have a licence to offer consumer credit. The FCA issues these licences, and they consider irresponsible lending before granting permission.

Using an established, reputable and regulated lender for a payday loan ensures they adhere to the required processes to make their loans and practices acceptable to the regulating authority. You may also wish to check the lenders’ privacy policy for their Information Commissioner’s Office registration number. This check will provide extra peace of mind that your data is used appropriately and is secure.

Are payday loans expensive?

More people than ever are taking advantage of a payday loan to help them out of an unforeseen emergency, partly because of the nature of payday loans in the UK. Lenders regulated by the FCA (Financial Conduct Authority), have rules they must all follow. Meaning their loans are transparent, and the interest or APR rate displayed on all advertising and their website.

When you compare a payday loan rate to a personal loan, it does seem high. However, payday lenders charge a higher interest rate because the period of the loan is much shorter. Meaning they have a shorter window of time to make a suitable return on the money they have loaned, so the interest rate tends to reflect this. The increased popularity of payday loans has also led to increased competition between lenders. This competition between similar lenders can help to drive interest rates down, which can only be good for consumers looking for a loan in the UK.

How does payday loan interest work?

In essence, payday loan interest works just the same as interest on other types of loans. The lender will set the level of interest to be paid on a loan, and this added to the amount you borrow. However, there is one noticeable difference between a payday loan and that of more traditional types of loans; the APR.

In general, short-term loans including payday loans, feature a much higher APR than other types of loans. The difference can often be huge, with some lenders charging over 2,000 %. There are various reasons why lenders charge so much on these loans, with the biggest being the fact that these loans feature a short repayment period.

As such, lenders charge more to ensure they get their money back and of course, make a profit. Therefore, you must remember that such cash till payday loans are designed only to be a short-term solution. If used correctly, these loans can be beneficial. However, because of their high APR, payday loans must not be considered as a long-term solution to financial problems.