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  • Representative Example: Rates from 35.9% APR to max 1304% APR. Minimum Loan Length is 3 months. Maximum Loan Length is 36 months. Representative Example: £250 borrowed for 3 months. Total amount repayable is £411.63 in 3 monthly instalments of £137.21. Interest charged is £161.63, annual interest rate of 292% (fixed). Representative 1192% APR (variable). *HappyPenguin will not perform a credit check but lenders will determine your loan eligibility by performing a soft search. If you accept the loan offer presented to you, a hard credit search will be performed.

    Is Working with Direct Payday Lenders a Good Idea?

    When researching your options on the lending market, you will sooner or later come across payday loans. There are many direct lenders on the current market that offer this type of product, and while it’s not perfectly suitable for every consumer, it’s definitely an option worth checking out if you’re not yet familiar with it. There are many things that you’ll need to keep in mind when taking out a loan of this type, but as long as you’re prepared for it, there’s not much that can go wrong in the first place.

    Payday Loan Basics

    A payday loan is designed to be repaid very quickly – much more quickly than other, more traditional types of loans. In some cases, you might have as little as one month to get the entire loan cleared, and lenders in this segment of the market can sometimes get very aggressive in pursuing defaulting borrowers.

    That makes sense though – direct payday lenders often have to work with people who end up defaulting on their loans, unfortunately for them, and this means that they have to be more careful in picking who they work with, and what kinds of conditions they provide them with.

    Charging higher interest rates on emergency loans is a good way to compensate for the ones that will end up defaulting. And every lender will tell you that they have enough information to know roughly how many of their borrowers are going to default sooner or later. In fact, some lenders might be able to predict the potential for a single specific person to default in the first place.

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    Direct Lenders vs Banks

    The main difference between working with a direct lender as opposed to a bank or another similar institution, is that a direct lender is the one who provides the loan resources on their own, rather than working as a middleman for a larger organisation. This is an important distinction, as it can often mean getting much better rates and other favourable conditions that you simply can’t get with a bank.

    That’s because a direct lender has more freedom in setting their own lending conditions, and they don’t have to coordinate their work with anyone else. On the other hand, this can also mean having to pay more occasionally, or dealing with less favourable conditions. It’s all a matter of who you end up working with.

    The diversity of the market is something that can work in your favour if you play your cards right. You can use information you’ve seen elsewhere as leverage when negotiating rates with a new potential lender. Since there is such a huge difference between the way different lenders work, you can often end up driving the final price of a loan down by a large margin if you’re careful enough. Of course, this is not always possible, and it mostly boils down to what kinds of competing deals you’ll be able to find in the first place. But if you’re lucky, it can go a long way towards improving your situation.

    The Reputation of Payday Loans

    You might also have heard certain thing about the payday loan market beforehand. While it’s true that some people treat it with suspicion by default, it really doesn’t deserve a negative reputation, at least not to the current extent. The problem is that payday loans are an “easy” tool, in the sense that it’s easy to get approved for one and get access to fresh new money through it.

    Many irresponsible people are drawn to fast loans as an answer to their various problems, but don’t think the situation over very carefully before deciding to take one out. And as a result, we see many people getting into situations of financial distress as a result of not having a responsible enough attitude to their own personal finances. The truth is that payday loans are not bad by themselves – they just have to be used in a responsible manner, much like many other tools on the financial market.

    A Variable Market

    The market for these products changes on a frequent basis as well. You can’t expect to get the same deals tomorrow that you’re seeing today. With that in mind, you need to constantly research the situation and know exactly what’s available before settling on any particular deal. When it comes to direct payday lenders, as we mentioned above, they have a lot of freedom in determining the conditions of their deals.

    As a result, this is a market that requires more research and a more directed approach when trying to find the best offer available. On the bright side, thanks to the Internet, it’s also easy to compare those offers and ensure that you’re getting the best one at any time. You just need to take your time and go through the process step by step, rather than jumping at the first attractive-looking offer that you’ve spotted.

    How Does Happy Penguin Compare?

    Why Use HP?
    What's the max loan amount?
    Up to £5,000
    No hidden fees.
    Is approval instant?
    Yes, immediate.
    On Screen Decision
    Poor Credit Possible?
    Yes. Bad credit too.
    All considered.
    Same day transfer?
    Within the hour!
    Direct to bank!
    Flexible Repayment Dates?
    Flexible terms.
    Quick and easy.

    Researching Your Situation

    You need to pay attention to your own situation as well. There are various factors that will affect the kinds of loans you are eligible for, and it’s a good idea to be aware of those factors before you even start searching for a deal on the market in the first place. Know your credit score and how it affects the deal, for example – you’ll often be able to improve your loan conditions significantly by just getting a better credit score.

    On the other hand, if you’re going for a loan that does not require a high score in the first place – like a secured loan with higher collateral – you should try to look for ways to reduce the required value of the initial collateral, and gather a list of factors that could improve your situation in the eyes of the lender. Then simply approach the lender with the information you’ve gathered.

    Treat this like a negotiation. You might have many factors on your side that affect the situation, but the lenders you’re working with will not be aware of them by default. It’s up to you to make those points known, otherwise you can’t expect to get the best deal.

    Consequences of Defaulting

    Defaulting on a payday loan is not the same as defaulting on a regular one. That’s the reason so many people have found themselves in trouble as we mentioned above. But the sad truth is that it could have all been prevented by simply doing a bit more research. All of the information you need is available right in front of you, and it’s up to you to actually do something with it.

    It’s often better to get into a slightly more difficult situation temporarily, if it would allow you to avoid defaulting on your loan, rather than having to face the consequences of failing to repay it. If you can borrow some urgent money on short notice, this can often be a better idea rather than dealing with the loan head on. Of course, make sure that you can handle any new loans you’re taking on as well.

    Protecting Yourself for the Future

    Getting a payday loan is a relatively simple and straightforward process, as you’ll find out quickly. However, it can also be troubling on your finances, just like any other kind of loan. With that in mind, you should be careful to ensure that this never happens again in the future, and that you’re always in the best possible position to avoid having to take out loans. There are many things you could do in this regard, and they’re not all immediately obvious.

    For example, figure out how you got into that situation in the first place. Was it an urgent expense, or the result of irresponsible decisions building up over time? It’s not rare that you’ll be able to trace your problems back to something very specific if you look hard enough.

    Alternative Loan Types

    Last but not least, always remember that the lending market is quite diverse and full of different deals that can work well in different circumstances. This means that working with direct payday lenders might not always be the ideal option for you. Look into alternative loan types and know what’s available. Do your research in as much dept as possible – for example, look into corners of the market that you would not normally consider, such as private lending.

    It’s usually possible to get out of situations of financial hardship one way or another. It comes down to knowing what your options are, and how to best utilise them. And this can only happen with enough research and a proactive state of mind.

    The market keeps evolving and it keeps getting better and better for everyone involved. There’s a lot to gain from working with modern lenders and using the right products, but it’s up to you to ensure that you’re actually getting the best deal at any time. It’s also up to you to know how this deal will affect your financial situation in the long run, something which is not always simple to predict.