Please note: High-cost short-term credit is unsuitable for sustained borrowing over long periods and would be expensive as a means of longer-term borrowing.
No-fee payday loans
A payday or short-term loan without any upfront or late payment fees naturally seems attractive, but it’s worth knowing the cost in the long run, and how to weigh up your options.
Payday and short-term instalment loans can provide a lifeline when you’re in a tricky financial situation, but because of their sky-high rates, they should only be used to cover one-off unforeseen expenses, rather than regular payments.
If you’re considering a payday or short-term loan, it’s understandable that a loan without fees attached would appeal, but in fact this feature shouldn’t be your main focus when comparing lenders. Here’s why.
Dot Dot simple online loans
- Borrow £200 to £1,000 over 3-9 months
- No penalty fees or extra interest
- Friendly UK-based customer services
- Quick decisions and loans usually transferred within one hour of approval (within working hours)
What fees can payday or short-term loans have?
You should always bear in mind that that in almost all cases, the interest you are charged will be the largest expense associated with your payday loan.
Whilst it’s obviously important to check the terms of the specific product that you’re thinking of applying for, you are unlikely to incur fees with payday loans unless you miss a loan repayment.
That said, it’s smart to check for the following fees before you apply for any loan:
Crucially, don’t forget that if you change your mind about a payday loan, you have 14 days within which you’re able to withdraw from the agreement – that’s known as your “cooling off” period. You’ll need to pay the interest that your loan has accrued in this time, but you’re entitled to a full refund of additional charges.
How to compare loans with no fees
The most important factor to consider when comparing payday/short-term loans is the total amount payable. It’s a more useful benchmark than the representative APR (related to the interest rate) which can fluctuate wildly even for payday loans which are almost identical, and which isn’t really designed with such short-term loans in mind.
Aim to keep the total payable as low as possible, while ensuring the repayments are affordable.
This figure won’t factor in any late repayment charges, but you shouldn’t be accepting loans unless you can be completely sure you can meet the repayments. Even if no one-off late payment charges are made, the additional interest and damage to your credit score is worth avoiding at all costs.
Don’t forget that lenders which don’t charge fees might offset this reduction in revenue with a higher rate – another good reason to focus on the total payable.
Common requirements for getting a payday loan with no upfront fees
All lenders will specify their own minimum eligibility criteria for borrowers. Being eligible means your application will be considered, but is no guarantee of acceptance. Whichever lender you opt for, you’ll likely need to:
- Be over 18 years old
- Be a UK resident
- Hold a bank account
- Be able to prove you have a regular income
- Agree to go through a credit search
Frequently asked questions
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