How to choose a Payday Lender

You’ve found a Comparison Site but now how do you choose the Payday Lender?

It wouldn’t be wise to simply pick one based upon how attractive their website looks, or how many TV Ads you see for that company. Consumers are best advised to do some research into the Lender they want to use. Why? The company you choose will have access to your financial information – and Bank Account. So review first.

When choosing your preferred Lender, use the comparison sites filters to help you decide. have a uniquely wide range of filters to help you – use them don’t use them, but make sure you review the Lenders. Is it important that you do not enter into an agreement whereby the Lender uses the Continuous Payment Authority service? Then using a filter, you can exclude those lenders that insist upon using it, leaving only those that do not.

The same applies to any of the other criteria the filters work with. A useful tool – so look for Comparison Sites like that offers filters.

Of course, it should end there. You should do a quick Google search and see if there are any negative reviews floating about; with regards to these, a good Lender would respond to any negativity and address it, so read a Lender’s responses, they can reveal a lot about the company’s ethos.

Finally, be careful out there – we would advise against accepting loans from cold callers; often these are fraudsters pretending to work for a legitimate company. A legitimate company will have a warning on their website if their name is being used inappropriately and any advice they offer should be heeded. We would recommend you apply online via the Lender’s application form.

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Comparison Sites for Short Term Loans

Why a Comparison Site, what advantages does it offer?

The answer is simple. When you use the services of a comparison site such as, you have access to a list of Lenders in one place and these Lenders are featured for the following:

1.       The Lenders are all verified.

2.       The Lenders are all Licenced and Regulated by the Financial Conduct Authority.

3.       The Lenders are all members of a Trade Association.

This means that if you apply to any of the Lenders on you can be assured that you are dealing with a reputable Short Term Loan company that can directly fund your loan – and not a Broker or an unlicensed organisation that is unregulated.

In addition you can often find filters on Comparison sites that will help you choose which Lender you want to make your application to; on they offer a wide range of filters that you can choose from. You don’t have to, of course, you can simply read about each Lender individually and make a decision based upon what they offer but should you want to, you can filter specific requirements that you have to ensure that only those Lenders offering those will remain for you to choose from.

A good payday lender comparison site service will also provide you with an affordability calculator so that you can work out your expenses before applying so that you know what amount you can comfortably afford to borrow. There will also be a wealth of information concerning short term payday and instalment loans to keep you in the know about how they work and what to watch out for.

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The journey of a first class payday company

Sitting back, post regulation, those companies that made it through can remember the journey. A payday company that played a large part in the industry shares its story from the first launch until now. In the present payday business climate, like many others, this payday company has reported losses of up to 35 million pounds. This can be compared to 2012 when the company announced a profit of 60 odd million pounds. Let’s see what happened from then to now.

In the beginning, there was a payday company

  • This company was born in 2007. Two entrepreneurs got together to found a payday company.
  • In the same year, they launch the company website online. The payday company offers loans up to 1000 pounds. Short term high-interest loans that are easily obtained and just as quickly paid back.
  • In 2008, the company has fully launched its product. There are 40 employees n London and a development team in Bulgaria. The founder claims to have served 50 000 customers during this beta-version phase of the companies development.
  • The company goes on to advertise their product using somewhat unconventional methods. This arouses condemnation from campaigners like Labour MP Stella Creasy.
  • In 2011, Stella Creasy continues her fight against what she calls ‘legal loan sharks’. She called for a cap on the cost of borrowing from the payday company.
  • This payday company also won the Digital Entrepreneur of the year by the Guardian.
  • Still in 2011, reports that the company has been lending money to people on benefits as well as information of the website that students could take out a student loan.
  • The OFT (Office of Fair Trading) looks into the matter and investigates 50 of the largest payday companies.
  • This payday company makes the changes that are requested by the OFT.
  • During 2012, controversy mounts against all payday lenders. The industry is accused of unfair debt collection practices, exorbitant interest rates, and cheating clients on websites.
  • By the end of 2012, it reports that it has trebled its earnings.
  • At the start of 2013, our payday company reports that it wrote nearly 80 million pounds off in 2011.
  • March 2013 sees the OFT give all payday companies an ultimatum to change their evil ways
  • Archbishop of Canterbury attempts to take down the payday industry by competing against them with his credit unions.
  • In October 2012 the FCA (Financial Conduct Authority) is charged with the job of regulating the industry, mostly by cracking down on existing practices.
  • In November 2013, George Osborne charges the FCA with the job of putting a cost cap on lenders. At the same time, one of the top executives takes a step back from running the payday company.
  • In July 2014, new rules were set out for all payday companies. Many companies leave the scene.
  • By September 2014, the payday company announces that profits have fallen by 50 percent.
  • Once again 220 million pounds are written off for customers that were more than 30 days in arrears.
  • The interest rate is cut in December 2014 in order to meet the cost cap.
  • In February 2015, this payday company announces that 325 jobs will be cut. Approximately one-third of the workforce.

It has been a long journey for the payday lender, and not always a pleasant one. Alongside all the outrage and controversy about the people that the payday lender ends money to, or as many would like to think, reels in and traps, there is still a company. A payday company, out to make a buck like the next guy.

Many of thousands of students turn to payday lenders. Maintenance loans and grants just don’t cut it.

Unite Students, a student service, took a survey to put a number on the many students that have turned to payday lenders in times of need. It was reported that 26 400 undergraduate students and 5 400 postgraduate students basically relied on payday loans to get by. In total, they could be paying up to 1500% in interest rates.

When asked to comment the payday lenders replied that students who turn to payday lenders for cash are “capable of making informed choices.”

Jenny Shaw, head of student services for Unite Students, makes it clear that the concern is for students who are turning to payday lenders in desperation. These students are taking out loans that they can’t possibly pay back. There is a great gap between the grants and maintenance that students can apply for and the money that they are actually given. It is no small wonder that students turn to payday lenders. A payday short term loan is easy access to the funds that are sorely needed.

Why do students turn to payday lenders?

Unfortunately we cannot dump any of the blame on the shoulders of the payday industry this time. In fact it would not be surprising that the payday lenders give out loans to students with regret and pity, wishing they didn’t have to. What is the problem? What makes students turn to payday lenders? Ed Milliband does not seem to think that student loans and grants need any kind of reformation. So students and their families sit in a tight squeeze while they sweat out those university years.

In London students can borrow 7 751 pounds per year for rent, food, and any other expenses like travel or entertainment. On top of that another 9000 pounds need to be coughed up for tuition fees, because that is basically how much it costs to teach a student these days. Now it doesn’t matter how you look at it, it’s just not enough and so the assumption is that the bank of Mum and Dad will step in and pay the rest. What if Mum and Dad and down at the payday shop as well? According to recent study, to live and study with basic needs covered, another 5000 pounds will need to be found. For those who make a medium sized income as well as those who make practically nothing at all, it is impossible to support the student in the family. So students turn to payday lenders.

Who is getting the blame for students taking out payday loans?

As usual the payday lenders are taking the wrap. Audrey Jordan, a student in London got herself into 6000 pound worth of debt with payday lenders. Here is what she says:

“I would say to students thinking about using a payday loan provider – take my advice: do anything to avoid it.”

At the same time the National Union of Students is speaking out against that the loans and grants are insufficient.

A spokesman from the Consumer Finance Association (CFA) stated that responsible payday lenders would not give a loan out to a student if they did not have a job or any other form of disposable income.

Payday in America – an overview of how payday works in the USA compared with the UK

Payday in America is much the same in the United States as it is in the UK, with one exception. The country is made up of autonomous states that govern themselves and have different laws for different things. With the advent of regulation in the UK in January this year, it is interesting to look around at the rest of the world and see how they are regulation this controversial industry. With 51 states and each having a different approach to regulation the small loans, short-term credit, it is interesting to examine how many states have regulated their payday lenders with the same rules that the Financial Conduct Authority finally settled on after a 20 month inquiry.

Payday in America – Different strokes for different folks

Upon researching payday in America there are many states that match some of the regulations in the UK. In Britain, payday lenders must now check those applying for a loan against a country-wide database to ascertain the credit rating as well as the number of loans that the person has taken out. There are several states that do the same thing and have implemented state-wide databases to ascertain if a person has more than one loan. The states that require this credit checking system are Illinois, Florida, Michigan, Indiana, North Dakota, Oklahoma, New Mexico, South Carolina and Virginia. What’s more Virginia and Washington limit the number of loans that customers may take out in one year which is something that has not been implemented in the UK. However, what both some states and Britain have in common is a cap on the rollover of the loan.

Most of these states also require that a lender extend the loan as well as lowering the interest rate on the loan as soon as it becomes apparent that the client is having trouble paying the loan off. This gives the client a better chance to get back on their feet and out of debt.

Since 2008, the District of Columbia capped the interest rate on payday loans at 24%. This interest rate is the same as banks and credit union and lenders must obtain a licence to operate.

In Georgia, payday lending was made a felony and could be hauled in on charges of racketeering.

New Mexico allows payday lenders but only under complicated circumstances. Rollovers are not permitted, fees and interest are removed from those that cannot pay back their debt, fees are capped, there is an enforced period of time between taking out a loan, a person’s total loans must be less than 25 of that person’s income.

North Carolina is busy with the process of weaning its population off of the credit system and then prohibiting it.

Finally, Arizona has capped the interest rate at 36% APR.

It is noticeable that many states put a lot of thought into regulating their payday lenders, which like the advent of the new laws in the UK can only be a healthy thing for an industry desperately searching to rub the tarnish off of its reputation.

Payday loan companies and price comparison website (PCW), what does this mean for payday loan companies?

The payday loan sector has been under investigation for the past 20 months and an independent panel of members of the Competition and Markets Authority (CMA) published their findings in June of last year. The publication has led to much scrutiny of the payday loan sector as well as new standards and legislation being passed. Payday lenders have now to contend with stricter measures of doing business which, if looked at in a positive light, sees these operations moving a step closer towards joining the reputable financial sector such as banks, buildings societies, credit unions, etc.

Online payday loan operators must be registered

One of the defining proposals made by the CMA to the Financial Conduct Authority (FCA) is that payday lenders that operate payday loans online must be registered on at least one Price Comparison Website. The FCA is authorised to enforce and control the process.

What is a payday loan Price Comparison Website?

With all of the scamming, stealing and cheating that has been rampaging around the internet for the past few years disguised as ‘payday’, the CMA has come up with an ingenious idea. We have all heard of at least one horrific story of somebody trying desperately to borrow some money online and instead having their bank account cleaned out. The Price Comparison Website makes things a lot simpler. Basically, a Price Comparison Website is a big friendly dog who likes to play fetch. You go to the website and tell them what you want to borrow and how, when, and why, and off it goes and comes back with a whole bunch of options for you. The best thing about our PCW game is that you know that the big dog is ‘friendly’. No scams, no nonsense, no sharks, which is the best news that payday loan companies that are doing bona fide business have heard in a long time.

A Price Comparison Website is not the middleman 

It has been a growing problem with the so called ‘middleman’, especially online, that poses as the payday lender itself. They are simply intermediaries. They set up practice to look like a payday lender and promise the best deal for the customer. Instead, they sell their ‘customer’s’ details to the highest bidding payday company. It doesn’t shine a very good light on anyone, and it’s difficult to ascertain what is what from a computer screen. The Price Comparison Website looks to change many options, and payday companies will have to sign up for an FCA registered site.

Simon Polito, Chair of the CMA’s payday lending investigation group, had this to say:

“To help them [payday lenders], we are requiring lenders to be listed on price comparison websites authorised by the FCA and have recommended to the FCA that these websites should carry all the information customers need to compare easily the total cost of different lenders’ loans. This will promote competition and provide the incentive for new and existing lenders to compete to offer lower cost loans and win borrower’s business. It will also make it easier for new entrants that offer lower cost loans to access customers.