What are good payday loans online?

Searching for good payday loans online might feel like a minefield. With so much negative press about payday loans, how can you avoid the cowboys and the rip-off merchants?

Believe it or not, the fact that so many online payday loan providers have collapsed in recent years should actually help you find a good payday loan online. The reason they have collapsed is that the industry is more heavily regulated than it used to be. The Financial Conduct Authority (FCA) now oversees the short-term high-cost loans industry and introduced some tough new rules back a few years back. 

These rules prevent borrowers from building up unlimited debts when missing payments to payday lenders. They also make it easier for borrowers who feel they were sold their loans in the first place, to make a claim for compensation with the Financial Ombudsman Service (FOS). And it’s these claims that have sent so many payday lenders into liquidation. 

So how do you find a payday lender online who lends responsibly? We have some great hints and tips to help you find the right loan online from lenders who actually have your interests in mind when lending you money.

Quick look – is the website clear?

The site should:

  • Use clear language
  • Provide representative APR and cost examples on home page
  • Include tools like calculators and sliders
  • Feature warnings about borrowing
  • Avoid promoting borrowing

To find good payday loans online, ask yourself:

Is their website clear?

If you come across the payday lender online and the website itself is a jumble of confusing messages and unclear information, this should set alarm bells ringing immediately. Lenders should clearly display the cost of borrowing on their websites, which includes detailing their interest rates in the form of their representative APR, as well as an example of the cost of borrowing.

If you are struggling to find the answers to simple questions from the home page or the FAQs section of a lender’s website, it might be a good idea to steer well clear. 

How do they compare?

We’re so very lucky to live in an age where we can gather objective information about products and services online, for free, whenever we are making a consumer choice. When it comes to financial services, comparison sites are invaluable assets that help thousands of borrowers to make better decisions every day. 

A good comparison site will help you to compare things like the cost of borrowing, the loan amounts and the terms set down by various lenders. However, bear in mind that not all comparison sites will include all lenders – with some only comparing ‘partner’ sites – so a better deal could be available elsewhere. Others will promote their partner lenders at the tops of their tables regardless of their actual position, but this should be clearly stated on the site itself, so keep your eyes peeled and wits about you when using comparison sites.

Are they using the heavy sell?

Lenders are not permitted to try to confuse or mislead borrowers when promoting their products. The FCA has clear guidance on financial promotion and it should be ‘clear, fair and not misleading’.

Payday lenders online need to take steps to make sure they are not encouraging borrowers to borrow repeatedly or borrow to cover day-to-day spending. They should state clearly that short-term high-cost loans are intended as short-term solutions to emergency cash shortages and that using them as a long term solution is not ok. 

Payday lenders should be open about the high-cost nature of borrowing over the short-term and explain the risks involved with borrowing more than you can afford to repay. Lenders that promote borrowing higher sums or taking out loans even when you don’t have steady employment and income could find themselves in serious hot water with the FCA or the FOS.

How much do they charge if you miss a payment?

You should never take out a loan assuming you will miss a payment. Having said that, it’s vital to make sure you know what will happen if you do miss a payment. After all, no one can be 100% certain about their future and it’s good to know the facts before you commit to a loan.

Remember, with the FCA now regulating the industry, you’ll never pay more than the amount you borrowed in additional costs, interest and penalties, no matter how long it takes you to repay the loan. Strict limits are also set on how much interest a payday lender can charge and this is capped at 0.8% of the loan amount per day. Therefore, paying off a loan quickly will always save you money. 

Do they keep their customers in the dark?

In the bad old days of payday loans, before the industry was properly regulated, short-term lenders would often do all they could to keep their customers in the dark. It was often made difficult for borrowers to find out their repayment dates, or their outstanding balances. Repaying early came at a penalty or was made very complicated and communication between the lenders and the borrower was almost impossible.

Times have changed, but some lenders still do a lot more to keep their borrowers in the loop. For example, here at Moneyboat, we encourage our customers to sign up to Open Banking and we have a dedicated Customer Portal where they can access any information to do with their account at any time. 

Do they have good customer reviews from online loan borrowers?

As a consumer, there’s no need to ever go into a situation where you could be spending money, blind. For everything from restaurants to insurance, there are now user reviews to help guide our decision making. 

For financial services products, such as loans, make sure you take the opportunity to check out online reviews on Google and Trustpilot. Here, borrowers are asked to leave their views and share their experiences to help others make a better decision. There is one caveat to bear in mind though. Sometimes people leave bad reviews simply because they were not offered a loan by a particular lender – a decision probably made responsibly by that lender.

Familiarising yourself with this checklist of questions will help you to weed out the unscrupulous lenders from those who lend responsibly. Whatever your situation, looking for a responsible lender is always the key to a good borrowing experience. 

Looking for a direct lender loan on a realistic payback schedule?

Warning: Late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk

Representative Example: Borrow £400 for 4 months, four monthly repayments of £197.48. Total repayment £597.48, interest rate p.a. (fixed) 255.5%. Representative APR 939.5%. Compare Moneyboat loans.

Blog Disclaimer

We do all we can to bring you interesting, practical and valuable information. However, please understand the following:

Moneyboat.co.uk are in no way connected or affiliated with the application or affiliate links mentioned in this or any article.  We do not receive any commission and are not responsible for any charges that may result from any free trials or paid subscriptions.

MoneyBoat.co.uk does not provide medical advice It is intended for informational purposes only. It is not a substitute for professional medical advice, diagnosis or treatment. Never ignore professional medical advice in seeking treatment because of something you have read on the site. If you think you may have a medical emergency, seek medical advice immediately or dial 999.

Information and data on this blog are for information purposes only. While we work hard to ensure it is accurate, we cannot accept responsibility for the accuracy, completeness, suitability or validity of any information provided on the blog. We will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use. All information is provided with no warranties and confers no rights.

If you feel that any of the information published on our blog is not accurate, please notify us via email at thecrew@moneyboat.co.uk.

Warning: Late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk