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Representative APR: 79.5 % (fixed)

Here's an example to illustrate: Representative APR of 79.5% (fixed). Here's an example to illustrate: If you borrow £1000 for 12 months, your monthly payment will be £123.40. The total amount repayable will be £1480.80, including £480.80 in interest. The interest rate is 79.5% (fixed). Interest rates range from 11.8% APR to 1721% APR. You can request a quote without any obligation. The APR you receive will depend on your personal circumstances. Our loans are available for amounts between £100 and £5000, with terms ranging from 3 months to 36 months

Payday Loans Guide

Taking out a payday loan

A clear, UK-focused guide to payday loans: how they work, the costs and risks, and safer alternatives—plus where to get free, confidential help.

On this page

Summary: Payday loans can provide fast cash before payday, but they are among the most expensive ways to borrow. In the UK they’re regulated by the Financial Conduct Authority (FCA), which caps charges and sets rules on fair treatment. This guide explains what they are, how they work, the true costs and risks, and safe alternatives.

What a payday loan is

A payday loan is a small, short-term loan intended to cover an unexpected cost until your next payday. In the UK, payday loans sit under the category of high-cost short-term credit. Amounts typically range from around £50 to £1,000, with repayments due within a few weeks or months. They’re easy to apply for, but the interest and fees can be high compared to other forms of borrowing.

Typical features

  • Small loan amounts, short terms
  • Fast decision and funding (often same day)
  • Repayments collected automatically
  • Suitable only for short-term, emergency needs

Key FCA protections

  • Daily interest/fees cap: 0.8% per day
  • Default fee cap: £15
  • Total cost cap: you’ll never repay more than double what you borrowed

Even with these protections, payday loans remain expensive. They’re rarely the best option if you need longer to repay or if the cost will stretch your budget.

How payday loans work

Applications are usually made online. Lenders will want personal details, employment information, income statements and monthly spending amounts plus your bank account number to determine if these loans are affordable.

  1. Apply – Complete an online form with your details and the amount you want to borrow.
  2. Credit & affordability checks – UK lenders must check affordability and may review your credit file. This is required by the FCA.
  3. Decision & payout – If approved, funds are sent quickly (sometimes within minutes, depending on your bank).
  4. Repayment – Payments are often taken via a Continuous Payment Authority (CPA) on your debit card or by Direct Debit.

Important: If there’s not enough money in your account, a repayment attempt could still be made. This might trigger bank charges and leave you short for essentials. If you think you’ll miss a payment, contact the lender as early as possible.

Always check the lender is authorised: search the FCA Register. Never borrow from unregulated providers.

The cost of payday loans

Because of the short term, APR figures on payday loans can look extremely high, but APR alone doesn’t tell the full story for short-term credit. What matters most in the UK is the FCA’s price cap:

  • Daily cap: Interest and fees can’t exceed 0.8% per day of the amount borrowed.
  • Default fee cap: A single default fee can’t exceed £15.
  • Total cost cap: You’ll never repay more than 100% of the amount borrowed in interest and fees.

Worked example

Borrowing £200 for 30 days:

  • Maximum interest/fees under the cap: £48 (0.8% × 30 × £200)
  • If you default once, max default fee: £15
  • Total repayable (worst case): £263

These costs can increase if you roll over or take multiple loans. Compare this with cheaper options like credit unions or an arranged overdraft.

Things to think about before taking out a payday loan

  • Can you repay on time? If the payment will leave you short for rent, food or bills, it may not be affordable.
  • Will this create a borrowing cycle? Re-borrowing each month is a warning sign of financial strain.
  • Impact on your credit record: Missed or late payments can harm your score.
  • Are there cheaper routes? Check alternatives below—many people qualify for help that avoids high-cost credit.

Tip: If the expense is a utility bill (energy, water, council tax), talk to your provider first. Most offer payment plans or hardship schemes that are cheaper than a short-term loan.

Alternatives to payday loans

Lower-cost credit

  • Credit unions (community lenders with lower rates)
  • Borrowing from family or friends (with a clear written plan)
  • Arranged overdraft (check fees with your bank)

Income & support

  • Employer salary advance schemes
  • Universal Credit advance (if eligible)
  • Local council welfare or hardship funds

Free, confidential advice

If you need longer to repay, you might prefer an instalment product. Learn more about instalment loans.

If you do take out a payday loan

  • Borrow the minimum you need.
  • Check the lender is FCA-authorised: use the FCA Register.
  • Compare total costs – not just the APR.
  • Read the agreement carefully, including how and when payments are collected (CPA or Direct Debit) and what happens if you’re late.
  • Keep copies of your agreement, schedule, and any messages.

Ready to proceed? You can apply for a payday loan with WageMe online. We’re an FCA-authorised broker—your application may be matched with a regulated lender after eligibility checks.

If you’re struggling to repay a payday loan

Don’t wait—getting help early gives you more options.

  • Contact the lender immediately. Under FCA rules, they must treat you fairly and consider an affordable plan.
  • Ask to freeze interest/charges while a repayment plan is in place.
  • Breathing Space (Debt Respite Scheme): up to 60 days where most interest and charges are paused while you get advice.
  • Speak to a free debt charity like StepChange or National Debtline.

If payments are taken by CPA: You can cancel the CPA with your bank or card provider. You’ll still owe the debt, but it stops unexpected collections—speak to the lender to agree a plan.

Where to get help

Looking for responsible borrowing? Start your application with WageMe: Apply for a payday loan or review our costs and representative examples.

Important information

WageMe is an FCA-registered broker based in the UK. We do not provide loans directly. If you apply, we may pass your details to one or more FCA-authorised lenders for a decision. Eligibility checks, affordability assessments and credit checks apply. Late or missed payments can cause serious money problems. For help, visit MoneyHelper.org.uk.

Warning: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk.