People with bad credit score can always turn to alternative loan providers through a loan connection service or payday loan direct lenders. Payday loan direct lenders are credit providers who engage you directly without involving the middlemen. They handle your application, process your request, and fund it. Now, why is it essential to deal with a direct lender? Well, it’s simple, you don’t need to go through a broker, which means you save money that would have gone into commissions. Also, your details remain with one organisation. Plus, direct lenders quickly process your request, awarding you the money you urgently need as soon as possible. In general, the UK market has a good number of payday direct loan lenders operating, but getting the right one is a cherry-picking affair. In this guide, we help you identify a payday loan direct lender, how to submit your application process, and compare some of the best direct lenders. Table of Contents Apply Now for a Payday Loan With Piggy Bank Our Rating APPLY NOW PiggyBank Loans have now gone into Administration Features of a Payday Loans Direct Lender With many lenders, financial brokers, and price comparison websites, it can be confusing to identify a direct lender. Save for transparent providers who clearly outline their services and fees they charge, and some lenders don’t. Since a direct lender both originates and processes your loan application, the entire lending process happens in one place. Thus, your questions or concerns can quickly get answered. Also, the loan process as a whole is faster. But not all direct short-term loan lenders are the same. That’s why some times using a broker is effective. These intermediaries would match your situation with the best lender for you. However, the process takes time, and you may have to pay higher fees owing to commissions. You don’t have the luxury of comparing lenders when you choose to use payday loans direct lenders. You have to do that yourself, moving from one lender to another, which is typically much more complicated than a comparison shop. Note: Make sure the payday loans direct lender you choose is clear on its position, whether it is a direct lender or a broker. It should clearly state this on its fine print. Some direct lenders also double up as a loan linking service. Pros and Cons of Payday Loans Direct Lenders Pros You work with one lender, which means the efficient flow of information. You save fees that would have otherwise paid as a commission. Your loan is processed faster Cons If you are hunting for a bargain, you may have to spend more time looking. You don’t get multiple options in one place. You have to research on the provider’s reputation by yourself. How We Rank Payday Loans Direct Lenders We know you need an ethical payday loans direct lender that is honest and provide clear and easy to understand information about its services. The lender needs to be compliant with the Financial Conduct Authority guidelines. But most lenders do just that, so, how do you separate the good from the best? Here are the factors we use: Cost of borrowing from the lender. No hidden nor upfront fees Same day funding option Availability of risk-free personalised quotes Eligibility indicator Loan terms Conditions for loan restructuring No guarantor required Bad credit considered Instant decision Payday Loans Direct Lenders – How do they work? Payday loans are short-term credits you go for to sustain you until your next paycheque arrives. They are suitable for emergencies or as cover for unplanned short-term expense. Most of the lenders we have discussed above will fund your application on the same day you submit your request unless you do so after business hours. Depending on your agreement with the lender, you’ll pay off the loan within one 7 to 90 days of borrowing it. However, this kind of loans is not suitable for the long term. They accumulate interest daily. So, the longer you hold on the credit, the higher the cost you accrue. Therefore, you should settle such as loan as soon as you can. Note: In the UK, the Financial Conduct Authority limits the daily rate of interest to a maximum of 0.8%. What’s more, you can always repay early and save on interest fees. Otherwise, failing to honour your payments may land in trouble as it will invite a penalty fee, which will only compound your financial problems. Payday Loans Eligibility Every lender has a unique eligibility requirement you must meet, which is why you need to find a lender that meets your exact borrowing needs. But some conditions are universal. In most cases, the criteria to submit your loan request includes: UK resident Must be 18 years of age, but some lenders go for 21 years. Must be employed Must have a UK bank account with a linked debit card Must provide a valid email address and mobile number Must not be bankruptcy, Some lenders may not allow a CCJ or IVAs Most payday lenders target people with bad credit. That means your credit score is not necessarily a determinant of whether you get approved for a loan or not. The Need for Credit and affordability checks Affordability and credit checks are mandatory for every loan application, whether it is a first time or subsequent payday loan application. The FCA requires that lenders carry out credit and affordability checks of their borrowers before granting loans. The law does not exempt payday loans direct lenders either. With that, some lenders may carry out a soft or hard credit check. But as we have already stated, your score won’t matter in the end. These checks are to protect the borrower from borrowing more than they can manage or afford to pay comfortably. Affordability checks compare your income to your expenses and establish whether there’s room for left for repayment amount that won’t get you into problems. That way, the lender can tell how much credit you may get. For example, if you are already holding another payday loan, it might affect the amount of the new loan you can have. As such, you may qualify for a smaller amount or may not even qualify at all. But it all depends on the lender’s unique eligibility requirements. Repaying Payday Loans Once you have received the loan, you must begin repaying them as per the lender’s developed schedule. You must pay the loan amount, interest, plus all the applicable fees. Lenders require you give your bank and debit card details to allow continuous payment authority (CPA). With the CPA, the lender automatically withdraws the repayment from your account periodically. However, you must ensure your account has sufficient funds. If you don’t, your bank may charge you overdraft fees or the lender may penalise you for failing to honour your payment in time. A reputable lender will alert you a day before they make they draw you’re your account. And since you are dealing with a direct lender, you can reach them quickly to let them know if you are facing any financial difficulty. The Best Payday Loans Direct Lenders 7. Piggy Bank – Best for Bad Credit Score Piggy Bank is a UK payday loan direct lender specifically targeting borrowers with bad credit with its loans of £100 to £1,000. Interested? The application process is fairly simple and the lender will not charge you any application fee. You, however, have to bear the brunt of bad credit as its APR rates are actually very high. Or what would you think of a 1,255% to 1,698.1% APR? Nonetheless, the high rate is the cost of transparency. Also, if you repay the Piggy Bank loan early, you’ll have nothing to worry about. It offers pure payday loans, which means you have between 7 and 35 days to settle it. If the limited payday loan period is too much for you to handle, you can go for its instalment loans that have a repayment period of between 2 and 5 months. But due to its exorbitant interest rates, you should avoid the Piggy Bank instalment loans. Our Rating Quick loan processing Easy access and repayment It is a direct lender Very expensive, with the lowest APR on offer being 1,255% Its instalment loans are financially crippling. Visit Piggy Bank Now 8. Peachy – Best for super-fast funding If you are caught in an emergency, Peachy is your to-go payday lender here in the UK. It is super-fast in processing your loan request, but has a very strict eligibility test. Your funds reach your account within an hour of application. How much do you need? Well, Peachy can lend you £100, up to a maximum of £1,000. Despite the low upper limit, you have the option of spreading the loan across up to 12 paychecks. Peachy outsmart Piggy Bank with a good representative rate of 720 APR. In some cases, though, you might pay more owing to multiple factors. For example, your credit score might push the rate up. But before you rush for this loan, you must ensure you have a minimum monthly income of £1,000. It doesn’t matter what type of income, it can even include benefits. Also, don’t bother if you have had CCJ over the last six months. Our Rating Low representative rate of 720% APR for those with stellar credit. Instant decision, and quick approval and disbursement. High minimum monthly income (at least £1,000) Unavailable to those with CCJs Visit Peachy Now Final Word Payday Loans direct lenders become your financial partners because of the lack of a better option. As you have seen, their products can quickly help you out of small money problems, but they are not solutions to underlying financial challenges. To be honest, if you don’t use them diligently, you can quickly enter into a debt cycle, because even though you repay them in smaller, manageable monthly instalments, they are expensive in the long haul. Apply Now for a Payday Loan With Piggy Bank Our Rating APPLY NOW PiggyBank Loans have now gone into Administration FAQs Is borrowing from a payday loans direct lender a good idea? Payday loans, whether from a direct lender or a loan marketplace, is only a good idea if you need a short term financial support. Such loans are costly. It is not surprising if the APR go well past 1000% mark. However, these loans have very few restrictions and are quickly accessible, making them the best option for emergencies and short-term financial hiccups. Which one is better between a direct lender and a broker? Each one comes with its benefits. A broker offers you a variety of options as they work with multiple lenders. However, this comes at a cost. You have to pay commissions, which further compounds into the price of the loan. For direct lenders, they deal with your directly, quickly processing your loan. You don’t have the benefit of options, though. You have to move from one lender to another if you must get the best bargain. Are payday loans available to the unemployed? Some may be available to the unemployed. Most lenders will need you to have an income to qualify for a payday loan. Such revenues include benefits and pension. Provided your revenue stream meets the lender’s minimum income, you are eligible for the loan. Do payday loans affect my credit score? Direct Payday Lenders do credit reference and search records. These searches may cost you points. Also, these loans go into your credit file, and if you hold them long enough, they adversely affect your score.