What you should know before applying for a payday loan

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The payday and short-term loan industry has undergone a lot of changes since January 2015, when the laws governing the industry changed. Before you apply for a payday loan, it is imperative you understand a few basic things about the loan and what the lenders are offering.

Rate cap

One of the biggest fears potential borrowers in the UK had was the interest rate. Previously, lenders could charge any rate they deemed fit. This is no longer the case as there is a rate cap, and you will never pay back more than twice the borrowed amount.

Quick, convenient service

Most payday and short-term lenders are present online. This means such lenders may not have a physical location. This works to your benefit as it allows the lender to process and disperse the loan quickly. The loan amount is deposited directly into your bank account and you don’t have to wait for it. You also use the same bank account to repay the loan.

Privacy policy

Make sure you check the privacy policy of the lender before applying for a payday loan online. This will give you a clear picture of whether your information and details will be kept safe and not shared with a third party, such as collection organisations and advertising agencies.

Online security

Check the online lender’s site for security software. There should be software to protect your personal information when you are applying for the loan. The majority of sites will have the right protection in place, but it is your responsibility to make sure the site you are using is trustworthy.

Payday lenders have to make all the charges clear in the beginning, before the loan amount is approved. While taking out a payday loan is safer than ever, you should still compare different lenders to get the best rate possible. You can easily compare lenders on allthelenders, a 100% independent price comparison website authorised and regulated by the FCA.