Our Guide to Bad Credit Payday Loans

Flexy loans guide to bad credit payday loans
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Bad credit history is no longer a barrier to finance with payday loans more regulated than ever before with a greater degree of consumer protection. The interest charge will depend upon your specific credit history and any financial issues you may have had in the past.

Over the last decade, we have seen a huge change in the payday loan sector with the introduction of more regulations, more protection and caps on charges and interest rates.

There are still various issues to consider with regards to bad credit payday loans, but for many people, this type of finance is their only real solution to short-term cash flow problems.

Keep reading to get all the nitty-gritty details about getting a loan with bad credit.

Can I Apply for a Payday Loan With a Bad Credit History?

Unfortunately, for those struggling to maintain their financial obligations, a relatively high-interest payday loan may be the only option. As long as you can present proof of income, there is every chance that you will be offered a short-term loan.

The interest charge on these funds will reflect your credit history, the amount and the term of the loan. While the vast majority of payday loans are relatively short-term, they can under some circumstances be extended up to 12 months.

How Can I Improve My Credit History?

One of the challenges with financial difficulties from years gone by is the fact that any problems will stay on your credit file for six years. As a consequence, you may have had bad financial problems five years ago, and resolved your issues, but they may still impact funding applications today.

As traditional lenders take a step back from those with troubled financial histories, for many people, payday loans are the only real option. If you have had major problems in the past, then you will need to wait until they are removed from your credit history.

There are ways in which you can still get a loan even with a bad credit score. We have written extensively about these and you can read about it here, ‘Our Guide To Short Term Loans & Credit Checks‘.

What Interest Rate Should I Expect With a Payday Loan?

While we often see mouthwatering annualised interest rates associated with payday loans, in many ways, this can be misleading. The average payday loan customer will borrow no more than £100, which will be repaid within 30 days.

So, when you annualise the interest charged over a 30 day period (bearing in mind the lender needs to make a profit), it often looks extremely high. In monetary terms, the actual interest paid may seem relatively low, but again this is all relative to the income of the borrower.

It is worth noting that, as the name suggests, for the vast majority of payday loan customers, it is simply that. A short-term loan until they receive their next wage at which point the loan will usually be repaid in full.

Problems started to occur with late payments, top-up loans and a general deterioration in the financial well-being of the individual. This is when interest can begin to build; charges can grow, and very quickly, things can start to get out of control.

Payday Loan Regulations

In the early days, the payday loan industry seemed to fall between two different stools, and there was a definite lack of regulation and control.

This led to an array of legal challenges with regard to extortionate interest rates, unreasonable charges and in some cases, unconventional debt recovery methods in the early days.

Eventually, the Financial Conduct Authority stepped in and announced a huge review of the sector back in 2014 which led to the introduction of new regulations:-

  • Fixed default fees were capped at £15
  • Daily interest was capped at 0.8% of the principal loan
  • Loan costs were capped at 100% of the initial funds

The final element is subtle but extremely important. For example, if you borrowed £200 and struggled with repayments, there is now a degree of protection. Interest charges and fees cannot exceed the initial loan capital, which means the maximum outstanding loan would never go above £400.

This by no means underestimates the problems this might cause for individuals already in financial difficulties, but it does avoid many of the issues of years gone by.

There are numerous stories connected with the payday loan industry “of old” were relatively small loans that have mushroomed into thousands upon thousands of pounds.

Payday Loan Online Applications

There is no doubt that the financial sector has benefited more than many from our ever-growing dependence on the Internet. It is now possible to research, review and apply for payday loans 24-hours a day, seven days a week in the comfort of your home.

There are no embarrassing visits to the local payday loan office, no uncomfortable phone calls and the ability to research the best rates for your situation.

Such is the liquidity (and popularity) of the payday loan industry and the recognition that funds are often required “immediately” that many successful applications will see funds transferred within 15 minutes.

As many banks now operate the Faster Payments Service (FPS), you can literally apply on your mobile on the move, wait 15 minutes and there’s a good chance that the funds will be in your bank account!

Common Reasons for Payday Loans

As the cost of living continues to rise, there are many common reasons why people look towards payday loans as a short-term cash flow fix.

These include:-

Everyday Expenses

Unfortunately, in recent times the cost of living has risen quicker than wage inflation which has therefore pushed many people towards a financial crisis.

Missed payments, debt reorganisations and short-term cash flow problems have seen many seeking payday loans to bridge short-term funding gaps.

Unexpected Expenses

It always seems to happen when funds are tight! Problems with your washing machine, car repairs required or unexpected repairs around the home are all too common.

For those already struggling to keep up with debt repayments, sometimes a short-term payday loan is the only option.

Holiday Loans

For many people, a family holiday is the only time they can get away from the hustle and bustle of everyday life and relax. Even though finances may be tight, they may have had issues in the past; many people will go without to save for their holiday.

Unfortunately, financial issues often emerge when least expected, leading to payday loans to make up any shortfall.


The payday loan industry we see before us today is very different from that of a decade ago. Regulations have tightened, customer protection is more robust, and we have seen various caps on interest rates and charges.

While the onus is still on the borrower to fulfil their repayment obligations, the days of £100 loans morphing into debts into thousands of pounds are thankfully long gone.

How Can Flexy Loans Help?

Here at Flexy Loans, we have partnered with some of the UK’s leading Lenders.

They have already helped thousands of people get loans already, and they can do the same for you.

Choosing a loan broker like us (we don’t charge any fees) means our application process matches you with the best loan available to you.  All lenders we recommend are regulated by the FCA, which gives you an additional layer of protection.

To apply and see what loan is available to you, click on the below and answer the question

Mark Benson
Mark Benson
Mark has been writing professionally for over ten years for the financial sector. Having started in the financial world as a stock-broker in central London and then moving to equities trader Mark is one of our senior financial writers who have a vast knowledge of multiple financial sectors.
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