Same day loans are a type of short-term loan that is paid into your bank account the same day you apply for it. They are also sometimes called payday loans.
They can seem like an easy way to get money when you need it. But same day loans often end up being a very expensive way to borrow. And they can make things worse if you cannot repay them quickly.
If you do not have enough money to get by, you might find free debt advice helpful. We will help you make a budget and explore your options.
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Considering a same day loan? What to be aware of
If you are thinking about getting a same day loan, there are some things to consider before you hit that apply button. And it is very important you know what can happen if you are not able to pay it back.
They are a very expensive way to borrow money
Same day loans have higher interest rates than other types of borrowing. You will see this in the terms of the loan as APR (annual percentage rate).
Many APRs for same day loans range from 9% to as high as 1,700%. To compare, credit card interest rates can be anywhere between 10% and 70%.
Same day loan examples:
If you borrow £1,000 at 9% APR for one year, you will pay back £1,049 and 42p in total.
If you borrow £1,000 at 1,700% APR for one year, you will pay back £3,460 in total.
Read our guide to how interest and charges work.
The impact is worse if you cannot pay it back
Things can get worse if the monthly repayments are too high or you miss any payments. Missing payments can lead to extra charges and can negatively impact your credit score. It could also make it harder to get credit in the future.
Agreeing to high monthly repayments can also impact your household budget and put you at risk of struggling more if you have an income shock. These are things like being made redundant or rising cost of living pressures.
Find out more about how your credit score can be affected by debt.
They are not for large expenses or paying off debt
People will often search for urgent same day loans as they need money right away. But same day loans are designed to be paid back quickly, like after your next payday.
Don’t use them to pay for things like:
- Holidays
- Christmas
- Home improvements
- Paying for other things you are late paying
There are other ways to plan for these. Such as making a budget.
Same day loan calculator
Our payday loan calculator shows you what a payday loan costs and how quickly the debt could increase.
Try the calculator