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Who are the best direct lenders for bad credit payday loans?

Bad credit payday loans are aimed at people with poor credit who need quick access to money during emergencies but can’t get it from traditional banks.

These loans offer only small amounts that need to be repaid quickly, usually by the next paycheck, hence the name “payday loans”.

The bad part is that payday loans have high interest rates and fees. They are only meant for short-term financial crises when you can’t get money any other way.

For better or worse, the UK has a whole industry of payday lenders. Some of these, like PaydayBadCredit, CashASAP, PaydayLoansOnline, The One Stop Money Shop, and Cashfloat, provide bad credit payday loans with different terms and approval processes.

Just to be clear, we’re not recommending any of these. Payday loans can be a gateway towards even more significant financial problems. But if you really are in a pinch, we think it’s essential to know which lenders not only accept people with bad credit but are also legit and transparent.

What are bad credit payday loans?

Bad credit payday loans are for people with bad credit who need money fast for emergencies. Banks usually say no to these people because of their bad credit. These loans give small amounts of money that must be paid back quickly, often by the next paycheck. Applying is fast, and some lenders can provide the cash on the same day.

The problem is these loans have very high interest rates and fees, much higher than regular bank loans. They are only for short-term emergencies when there are no other choices because of bad credit. They are not good at all for long-term borrowing.

While they are quick, only use these loans if you have no other options. If you can, always hold off taking one of these loans and work on improving your credit score to get better loan options in the future.

There are many things you can do and many tools you can use to build your credit history. One such tool is Wollit. Wollit reports a monthly fixed subscription fee as a monthly loan repayment to credit reference agencies, helping you build credit safely and affordably while you prepare for better loans.

What are direct lenders?

A direct lender is a company that lends you money directly rather than going through a broker or third party. You’ll usually know the website you’re on is a broker because somewhere at the bottom of their page, they’ll say things like “we’re a broker, not a lender” or “we’re an intermediary”.

While a broker can give you many options to choose from, going to a direct lender instead has a few advantages, too:

  • It can make the process faster;
  • It can also make it easier to get approved;
  • It might also be cheaper: some broker websites ask for “broker introduction fees”.

Who are the largest direct lenders who offer bad credit payday loans?

Here are some of the best direct lender options for bad credit payday loans in the UK:

  1. PaydayBadCredit. This lender offers payday loans up to £1,500, which you’ll need to repay between 3 and 9 months. They run a creditworthiness check to see if they can fund the loan directly; otherwise, they pass the application to other lenders. They also claim to provide an instant decision and can often transfer funds within one hour of applying.
  2. The One Stop Money Shop: provides bad credit loans from £400 to £2,500.
  3. Salad Money. Specialising in “More Than Your Score” bad credit loans, Salad Money uses alternative data beyond credit scores to make lending decisions. It is regulated for responsible lending practices.
  4. CashASAP is a direct lender that allows you to ask for your application to be reconsidered if you object to automated credit scoring.
  5. PaydayLoansOnline. Besides payday loans, they can also offer secured loans and personal loans.
  6. The One Stop Money Shop: offers loans between £400 and £2,500. Like others on this list, it claims to provide an instant decision after a 5-minute online application and to process loans on the same day.
  7. Cashfloat is another fast lender that guarantees a decision within 2-3 minutes. Similar to PaydayBadCredit, it offers a free brokerage service if it can’t fund the loan directly.

What all these direct lenders have in common are three things:

  • They all make decisions fast.
  • They cater to all credit scores.
  • The key is to apply with a direct lender that considers bad credit, provides a quick decision, and is transparent and responsible about lending. Comparing options from the lenders above can help you find the best payday loan for your situation.

What are the requirements for getting a bad credit payday loan from a direct lender?

To get a bad credit payday loan from a direct lender, you’ll usually need to meet these criteria:

  • Be at least 18 years of age;
  • Be a UK resident;
  • Earn over £1,400 per month after tax;
  • Have been employed by your current employer for at least 6 months;
  • And have a UK bank account.

As you can tell, your credit score isn’t really considered. That’s because these lenders compensate for the risk that you’ll default on your loan by charging extremely high interest rates and fees.

What is the interest rate direct lenders charge for bad credit payday loans?

The interest rates for these loans can be extremely high, ranging from 200% to 900% APR on average. Yes, you read that right.

While these rates might sound crazy, you must bear two things in mind.

First, if you have a very poor credit score, chances are you’ve had debt issues before. Maybe you missed more than a few payments; you defaulted; maybe you were taken to court by a bank. Whatever it was, until some time has passed and your credit history has improved, the risk that you will default again is very real.

This is why we recommend you do not take a bad credit payday loan from a direct lender or broker. Find another way to raise money and take time to rebuild your credit history.

Second, APR is an annual rate. However, most payday loans are meant to be repaid much faster than that, usually within a month or so. So, while payday loans are still expensive, you shouldn’t have to pay 2 to 6 times your original loan amount in interest fees alone.

This doesn’t mean that payday loans are a good decision. They’re not. You need to carefully consider the high costs of these loans and make sure you can afford the repayments before taking one out. Defaulting on a payday loan can lead to additional fees and damage your credit further. Looking into alternative options like instalment loans or speaking to a debt counsellor or even a relative may be a much better option for you.

What are the pros and cons of a bad credit payday loan?

A payday loan does have a few advantages:

  • Quick access to cash, often on the same application day, can be crucial in emergencies.
  • Minimal eligibility criteria, making them accessible even if you have a poor credit history or low income.
  • Bad credit payday loans are also usually unsecured, meaning you don’t need to provide collateral like a car or house.
  • And choose a responsible direct lender. They may also offer flexible repayment plans that align with your payday, which can reduce the risk of missed payments.

However, the disadvantages of a payday loan are still quite bad:

  • Bad credit payday loans are the most expensive way of borrowing money. We’ve seen payday loans that advertise APRs of up to 1500%!
  • Failing to repay a bad credit payday loan on time can lead to a cycle of debt, in which you may need to take out other payday loans to pay for existing ones.
  • Some people view bad credit payday loans as predatory because they target people with low income and bad credit history, pushing them even deeper into debt.
  • There are also many scams happening in this space. We recommend you research every direct lender you apply with before applying for a loan.

In short, while bad credit payday loans offer quick access to cash, they come with high costs and risks that you should not overlook.

What are the alternatives to bad credit payday loans in the UK?

Just because payday loans exist doesn’t mean that you should take them. Here are some much better and safer alternatives:

  • Personal loans: you can get a personal loan even with bad credit. Personal loans also offer longer repayment terms and lower interest rates than payday loans.
  • Cash advances from credit cards or paycheck advance apps can be another cheaper alternative to payday loans, especially if you pay off the balance within the interest-free period.
  • Guarantor loans require a guarantor to co-sign the loan, which can help you get a loan at a lower interest rate.
  • Overdrafts: using an overdraft on your current account can be cheaper than a payday loan, especially if your bank offers an interest-free authorised overdraft.
  • Credit unions: Credit unions are non-profit organisations that offer loans at lower interest rates than payday loans. You might need to be a member of one first, though.
  • Salary advance: If employed, you can ask your employer for an advance on your wages. This can be a much better option than a payday loan; it would serve the same purpose and require no extra fees or interest.
  • Budgeting loans: If you’re on benefits, Budgeting Loans from the UK government can provide up to £800 interest-free, depending on your circumstances.
  • Local welfare assistance schemes offer vouchers, food banks, or pre-payment cards for essential items.
  • Bad credit loans: These loans have higher interest rates than most other loans but are still lower than payday loans, and they can offer better terms, too.
  • Finally, ask a friend or family member for some cash. It might be embarrassing, but it’s still better than entering a debt spiral.

Can a bad credit payday loan help me improve my credit score in the UK?

In theory, taking any loan and repaying it on time can improve your credit history. This applies to payday loans, too.

However, payday loans, in practice, tend to hurt your credit score more than help it. While making timely payments and repaying the loan entirely on the due date can help maintain and improve your credit score, payday loans are not usually meant for this. The high interest rates and short repayment terms that payday loans come with can make it hard to repay without additional fees or penalties.

To improve your credit score, you should focus on building better financial habits instead:

  • Pay your bills on time
  • Pay down the debt you already have;
  • Check your credit report regularly for any errors.

Also, looking into other options such as credit builder cards or credit-builder apps like Wollit is much more effective than payday loans at improving your credit score in the long run.

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Terms apply. Results may vary. Improvements to your credit score are not guaranteed. Wollit Credit Builder plans are unregulated.


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Terms apply. Results may vary. Improvements to your credit score are not guaranteed. Wollit Credit Builder plans are unregulated.