Payday loans are short-term loans for small amounts of money. They are available from high-street shops and internet sites. Payday loans are marketed on the basis that getting a loan is quick and easy and that they may lend you money even if you have poor credit history. Their interest rates are very high.
The average payday lender charges £25 for every £100 borrowed, if you pay it back within a month.
If you have a credit card with an APR of 20%, then it will cost you £20 to borrow £100 for a YEAR
If you decide to get a payday loan, shop around and compare the interest and charges before you borrow. Make sure you are clear about what will happen if you can’t pay it back.
To find out further information about how payday loans work, what you should think about if you’re considering a pay day loan and how to stop a payday loan, via our Advice Guide below: