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Payday loans:
Short term loans, long term problems

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payday loan advice from StepChange

Payday loans. Don't use them to deal with debt.

If you’re struggling with debt problems, payday loans aren’t the answer. They’re a short term type of loan and will usually have a significant amount of interest.

It’s important to know that payday loans are not a debt solution and can make your financial situation worse. Our free guide to payday loans will take you through all the ins and outs you need to consider with a payday loan. You can also watch our video to find out more on what questions to ask yourself before taking out one of these high-interest loans.

Is a payday loan right for me?

It depends on your situation, but there’s a likelihood that a payday loan isn’t a good idea. It’s important to make sure you think things through before taking one out. You should consider:

  • Why do I need a payday loan?
  • Are there other sources of finance available with lower interest rates?
  • Can I afford to repay the debt on time?

Watch our payday loans video to help you find your answers to these questions:

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Alternatives to payday loans

There are several alternatives to consider before taking out a payday loan...

  • Your local credit union: they provide straightforward and affordable financial products. Credit unions are likely to be far cheaper than payday loans. 
  • Sell your unwanted items: have a clear out and turn these into cash
  • Cut back: reducing your spending might be enough to avoid the payday loan trap
  • Ask friends and family for help: it might mean swallowing your pride but could save a lot of worry in trying to repay a payday loan
  • Get debt advice: if you're considering a payday loan to deal with an existing problem then you'd be much better getting some free and impartial debt advice from us

What are rollovers?

If you have taken out a payday loan and are coming to the end of the repayment period, the lender may offer you a chance to roll the balance over for another month. This might sound great in principle, but rollovers involve additional costs and charges which can often make things more difficult.

New rules state that payday lenders cannot rollover an outstanding payday loan balance more than twice. If a rollover occurs, the lender must send you an information sheet with contact details for various debt advice organisations. A copy of this information sheet can be seen here

What is continuous payment authority?

When you give your credit or debit card details to a company, you are authorising them to take regular payments. This is known as a ‘recurring transaction’ or ‘continuous payment authority’ (CPA).

They work like direct debits, but can be very difficult to cancel and they don’t offer the same guarantee if the amount or payment date changes. This means companies can take as much as they like without giving you notice.

Payday lenders cannot make more than two attempts to deduct money from a debtor’s bank account by means of continuous payment authority unless a rollover has been agreed.

Have you got any payday loan stories?

If you’ve taken out payday loans in the past what attracted you to them? Why did you take one out, and did you find all of the loan's details on the lender’s website sufficient to make a considered opinion?

Or, have you receive cold calls or spam texts from lenders? What do you think about these loans being advertised on TV and radio?

Please add your comment to the box below. All comments are welcome, and may be published.

Payday loan calculator

Use the sliders to enter the loan details. We’ll show you an example of how the amount you pay back can soon spiral if you can’t repay it in full when it’s due.

Loan amount: £100
Loan period: 1 day


average payday loan debt

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Helping you become debt free...

“I wish to thank your staff for all the great help they gave me when I was in so much debt.
They were a pillar of support to me.” (Leslie, Essex)

Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

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