During these uncertain times, it is possible that more people than normal may be looking for short term finance to help alleviate the loss of wages or cover unexpected costs.
allthelenders is a price comparison site for such loans, however, we wanted to make you aware of the risks and costs associated with this type of credit and also what you should expect of the lenders that show their products on our site.
For those considering a new loan
For anybody looking at taking out a new short term loan, we would urge you to consider every available alternative first. Alternatives to high-cost short term credit are available here on the Money Advice Service website.
High Cost Short Term Credit is not suitable for long term borrowing.
You should ensure that you are able to afford any loans that you may be considering. We would urge you to check all contracts and costs before agreeing to a loan, including the total cost of the credit, the loan duration and the amount of each instalment. Whilst we take every care to ensure comparisons are accurate on our site, in many cases costs are associated with your credit profile so may change slightly from what we display. More information about how our comparisons work is available here.
Payday and Short Term Loans can be tempting for many people because of the speed at which they can be agreed and paid out, however, you should also remember that they carry the same responsibilities, risks and costs that all other types of credit carry (personal loans, credit cards etc). Missing payments may result in additional costs and harm your credit profile.
Please consider all alternatives before applying for short term finance.
If you are certain that this type of credit is what you need, here is a reminder of some of the key rules that all high-cost short term credit providers must follow. These rules apply for loans that are for less than 12 months and over 100% APR (broadly speaking this would define High Cost Short Term Credit):
- A lender cannot charge more than 0.8% interest per day (equivalent to 292% per year) – this means that for every £100 borrowed the interest charge will never exceed 80p per day.
- Lenders must have their products displayed on a FCA authorised price comparison website (like us) – the website they choose to show their products on should be displayed prominently on the lenders homepage. Whilst we cover a large portion of the market, we do not cover it all. It is important for you to compare loan costs before applying.
- Lenders will not charge you a fee for applying for a loan nor for transferring the funds to your account.
- The total cost of the loan, including all interest and fees can never exceed 100% of the amount borrowed.
- Lenders may charge you a one-off fee of £15 for a late or missed payment.
- Lenders will be obliged to provide you periodically with a Statement of Borrowing (we will cover more on this further down the page).
- If any lenders are not adhering to the above we would not recommend applying with them
These rules cover the essential information. All lenders that we work with are regulated and authorised by the Financial Conduct Authority.
You may find that during these uncertain times, lenders will tighten their lending criteria and may not be looking to fund as many loans as perhaps they usually would. If you are declined we would not recommend making multiple applications to lenders as this may harm your credit profile. We do offer an eligibility checker which is available here. Using this tool will tell you which lenders are likely to accept your application without harming your credit score.
It is extremely important that when you apply for a loan that you are honest and truthful in your application. If you have recently been furloughed or lost employment, you must declare this in your application. Applying for credit using false information may be considered an offence.
If you have recently been furloughed, are you sure that adding on additional cost to your next pay is not going to put you in a worse position?
For those with existing loans
If you already have an existing loan with a lender and you are experiencing difficulties in managing your finances through the Covid-19 crisis, you should speak to your lender immediately.
Lenders have a duty of care to their customers and will be able to help you through this period. Email addresses and phone numbers of the lenders we work with can be found on the individual lender pages located here.
If you are worried about money or your debts, you can also find support and help with the following organisations:
If you have an existing loan you should not apply for further credit from high cost short term lenders.
If you do have existing loan(s) you should also be made aware of the responsibilities that lenders have to you, one of these being the Summary of Borrowing.
Lenders must provide to you a Summary of Borrowing when:
- You settle the balance of a loan
- Your account is closed as a result of default or forbearance
- Your account is in default and three months have passed since a payment was missed but the lender does not close the account
The Summary of Borrowing must be available to access on the lenders website (if you applied online) or by email if requested. You must be notified when it is available and within 1 working day of any of the events described above.
Lenders must take responsibility to bring the Summary of Borrowing to your attention.
Your Summary of Borrowing should include the following information:
- The initial amount borrowed
- The original duration of the loan or the facility
- Details of any subsequent increase in the amount borrowed or the duration of the loan or facility
- Details of whether payment was received in full and on time or whether partial or late payments were made
- Where the loan was repaid in multiple instalments, details of the number of instalments where the borrower either did not make the agreed payment or payment was late
- The cost of borrowing
- A summary of any costs accrued but not paid as a results of forbearance or default
If you take out more than one loan within a 12 month period with the same lender then the summary must also include:
- The total number of loans taken out
- The total amount of all fees and charges paid
- The total amount of fees and charges incurred as a result of late or partial payment
All summaries must also include:
- If you have not taken out any loans in the preceeding 12 months, confirmation that this is the case
- How you can access more detailed information about their loans, if available
- A web address of at least one FCA authorised Price Comparison Website on which that lenders products are listed
If your lender is not complying with this order you must ask the lender in the first instance for your Summary of Borrowing. If you are still unable to obtain this information you may wish to submit a formal complaint to the lender.
We hope that this information has been of some use to you. If you have any further queries or questions you can contact us at [email protected]
Please stay safe and borrow responsibly.