A payday loan is a short-term loan that usually comes with high interest rates and charges.
The loan will be paid into your bank account and in most cases will need to be repaid in full at the end of the month.
Payday lending was originally designed to tide people over until their next payday, but some loans are now available for a longer period of time.
Payday loans are also sometimes called cash advance loans or check advance loans.
The Office of Fair Trading (OFT) irresponsible lending guidance requires lenders to treat borrowers in financial difficulty fairly with patience and tolerance, which essentially means they should work with you to come up with a plan to repay your debt over a reasonable timescale.
Any action your lender takes must also be proportionate. For example, they can’t try to repossess your house just because you haven’t paid your credit card bill.
If you’ve borrowed money from a payday loan company, check if they’re a member of one of the main trade bodies, such as the Consumer Finance Association (CFA), the Finance and Leasing Association (FLA), the Consumer Credit Trade Association (CCTA) or the BCCA.
The main payday lenders have signed up to a customer charter which requires members to:
They’ll help you find the right debt solution for your personal circumstances and may help you negotiate new or reduced payment terms with your payday lenders.
Don’t use a commercial debt-management company. There is plenty of free, independent debt advice you can use.