Direct Payday Lenders

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Direct Payday Lenders

When looking for a loan, be it a payday loan, instalment loan or any other type of loan, it is important to consider who you apply with and where your details are being sent. If you search on Google for a loan you will be faced with a long list of companies offering their services. From the adverts it will be very difficult to tell the difference between all the companies listed. It is quite normal for all the companies to claim that their offering is the best thing since sliced bread. In fact some of the claims are so extravagant that you could be forgiven for believing that they are perfect solutions.

In reality, if you searched for a payday loan, the list will be a mixture of direct payday lenders, brokers, affiliates and comparison sites. The brokers, affiliates and comparison sites will not lend you any money. They pass your completed application, as a lead, to a lender. It could even be that your completed application form will be sold to another broker who will then sell the lead to a direct payday lender.

You should know that your details are being passed around to find someone who will lend you money. I would strongly recommend that when looking for a loan you be mindful of the brokers and affiliates as they are not going to lend you any money themselves.

This is not always bad in itself as there are some great affiliates, brokers and comparison sites, but they should be understood fully in terms of what they do. They really are only there to make money out of you and the direct payday lender. If they did not exist, the search engines would only have the ultimate lenders listed and it would be easy to decide if you borrowed from, say, Wonga.com, Payday UK, True Blue Loans or whoever. 

This will never happen, as Google make a lot of money out of the brokers, affiliates and comparison sites. Also these introducers make serious profits, in 2012 Moneysupermarket.com made £66,000,000 profit. It is hard to imagine how much the profit of all the introducers would be if one single, albeit largest, introducer can make £66,000,000 profit!

 

Payday Loans Direct Lender

With many loans now being offered on the internet it used to be difficult to tell if the site you are on is a payday loans direct lender or a credit broker.This was not helped by the fact that many credit brokers try to make themselves look like a payday loans direct lender. This problem was solved by the Financial Conduct Authority who now mandate that any site used for brokerage only clearly display a statement to that effect. The big problem with broker websites is that they cannot give very specific information about the loan that they will find you, as they do not know until you apply who that will be with. For example they may find you a lender that charges a interest rate of 292% p.a. or they may find one at 110% p.a. One may offer one tye of repayment whereas another may offer different terms. So they cannot, for example, have a 'Rates' page as this will not be true of all loans on offer. Normally a direct lender will show you their key features, such as terms, conditions, rates and FAQ and there are specific for their loans.

So what if you use a broker, surely that will get you the best deal.

The advantage of using a broker for payday loans is that, if you are struggling to get credit, they will be able to quickly offer your application to many lenders and even other brokers they work with, thus saving you the trouble of typing your details into many different sites. You will not know who has turned you down, only the lender who finally agrees to consider the application further.

There are however many things that people do not know about some brokers in the payday loans market.

Firstly, most broker will be paid a commission by the lender for introducing you to them. This commission will vary from a few pounds up to £50+. Now the important part is that most brokers will base the order they offer your application on the commission each lender pays, and not which is the best/cheapest loan for you.

Secondly, look out for broker fees. When you apply with a payday loans direct lender, they will collect your debit card details so that they can collect your loan payments as and when they come due. Normally, if you do not get a loan, nothing will be debited from your card. Some brokers will also collect debit card details and will then charge an upfront fee, often as much as £65.00 in order to find you a loan. While a brokerage fee may be expected with a larger loan, paying £65.00 for a £300 payday loan seems extortionate. Again the FCA has stepped in here and now any fee charging payday loan broker MUST display a notice to advise of this AND get explicit consent from the customer to take the fee.

Finally, in the brokers small print by applying for a loan you will normally be agreeing to each of the lenders conducting a credit check on you. If you are offered to 10 lenders before one agrees to buy your application, you could get up to 10 credit searches on your credit file. Other lenders may then look at your credit file and wonder why so many others have turned you down. This is hopefull an improving situation as the FCA has once again stepped in and are encouraging the use of 'quotation searches' for this purpose which do not leave a footprint on customers credit files.

It is therefore advisable to shop around, see who is offering the best deal and one that is suitable for you. Be your own broker and apply directly with a payday loans direct lender, if that is unsuccessful do some more research and find another one.

Direct payday loans and what they offer people 

Before anyone takes out a loan they have to know what kind of loan it is that they are after. They may not even realise but there are many different types of finance available in the financial market place. People can take out short term single repayment payday loans where they borrow a set amount but then repay plus interest on their next available payday. Instalment loans are also common as a way of borrowing where amounts are borrowed but then repaid over a set number of months instead of in one go. Lines of credit such as the credit card are other ways to borrow money where monthly repayments will then be due on the product until it is fully repaid. Before any of the above are applied for a customer must decided that they definitely need the loan in the first place and then know how much they need to borrow. The lender must then be chosen and this is always a tough choice as there are so many different lenders available and they can each offer different things to the customer. All of the above should definitely be considered before a loan is applied for and then taken out as well as that customer knowing whether the loan in question is affordable for them to manage. Missing repayments will always have severe consequences for that person and it is something that most people will always wish to avoid. In this article I am going to look at the direct payday loans market and then in detail explain what they offer the customer, I will be selecting a couple of positive attributes and then also list a couple of negative factors in regards to the product.

One of the main benefit a direct payday loan can offer to the borrower is the speed which these kind of loans can offer the consumers. Most people taking this product can submit their applications mainly online or occasionally over the phone in just a few minutes and sometimes if the application is accepted people can be funded just as quickly. Most of the lenders can offer same day funding and many do not charge for this. This is perfect for people who need the money quickly or if they suddenly have any cash emergencies arrive at least now they know they have the required funds available for them to manage that repayment. 

There will be people out there looking for required finance that have poor credit. A payday loan can help people in this situation. People with poor credit will find obtaining finance hard and more expensive however payday loans specialise in helping people in these forms of situations. They do actually credit search customer but normally have different criteria to the ones completed by a major bank or building society for example. The reason is that many look for more recent 'good' to outweigh older 'bads' so if you defaulted on a loan when you were 18 and have paid 6 loans back in more recent times then you would possible meet their criteria. This gives a range of customers the ability to borrow money even if they have missed other debt repayments in the past. Missing loan repayments can result in making a credit file worse as when a loan agreement is in default this can last on the credit score for up to six years.

One of the main negatives on the direct single payment payday loan product would be the fact that the product has a real lack of flexibility. When this type payday loan is taken out the full balance must be then paid with interest on that persons next available payday. This means once a loan is taken out the customer will have up to a thirty one day payment duration as the maximum time it takes for the full balance due to be due. Repaying any loan in full will be tough for people to manage and if at all this becomes impossible for someone to action then their alternative repayment options are then limited. Sometimes a rollover can be offered and this is when someone repays the interest only amount but nothing of the capital is repaid. This should be avoided as when that person is due to make another repayment the same balance is till due. 

Now some lenders are diverifying into payday instalment loans. This means that you will take out a similar amount to a single repayment loan but pay it back over a number of monthly instalments. While this is good as it makes the monthly repayments less, these loans are expensive and the overall cost is going to be higher than a single instalment loan (assuming the same interest rate) 

 

About the author:

Kieran Moulden is the founder and Managing Director of True Blue Loans (www.trueblueloans.co.uk), a company offering instalment loans over 3, 5 or 6 months, with fixed repayments and no fees, just daily interest. He is passionate about ensure that consumers get a fair and honest deal when dealing with short term consumer finance companies.