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How does a payday loan application work?

The Lenders List features over 30 payday loan direct lenders on our website and the loan application is completed online on the lender’s website. Most lenders have responsive websites meaning that you can apply easily on desktop, mobile and tablet. So provided that you have internet, you can apply for a payday loan online. Every lender has a different application form and this page will help you understand why you are being asked various questions and the reasoning behind them. We look further into what checks our featured lenders are carrying out, how soon you can receive your funds and the different loan decisions.

A payday loan application typically starts with the lender asking for your basic details such as name, home address, email address and mobile number. These are the basic contact details and having a working email address and mobile phone number allows the lender to contact with the details regarding your loan application.

1.1 Application Example with Peachy Loans

Regarding employment, the lenders we feature need to understand your employment status whether you are full time, part-time employed or on benefits. Lenders will typically ask for your monthly take home and for your next pay date – this is important because the lender will want to collect the repayment from your account when there is money in your account and this is likely to be on our pay date – usually the last working day of the month.

Applicants will be asked to enter their bank details including their sort code, account number and their debit account details. The sort code and account number is required because this is where the lender will be transferring the funds to.  The debit account will be required because this is where repayments are going to come out of. The collections are carried out using a process called Continuous Payment Authority. For more information, read how do repayments work.

1.2 Application Example with Wageday XPress

Finally, you will be asked to tick the terms and conditions and privacy policy. It is important to have a quick read through to understand the exact type of product the lender is offering, whether there are any fees involved and most importantly, how they use your data.

Once completed, most lenders will give you an almost instant decision letting you know if you have been provisionally accepted or not. If provisionally accepted, some lenders will ask you to electronically sign the loan agreement. To save you from printing off and posting documents, you will simply receive an SMS code and an email and by clicking on the link in one of your emails, you will see the terms and conditions of your loan and to sign it, you simply enter the SMS code. This is like you have signed the agreement. Some lenders can transfer funds immediately but others will be able to provide you a loan subject to further checks, which we discuss in more details below:

What Checks Do Payday Lenders Carry Out?

Basic Criteria – The lenders we list typically don’t lend to borrowers on benefits or Job Seekers Allowance. The basic criteria that our lenders are looking for to be eligible for a loan are being over the age of 18, in employment whether its full time or part-time, having a working debit card as mentioned above, have a working mobile phone and be living full-time in the UK. Fulfilling this criteria should make you eligible to apply for further checks are required to determine your eligibility and these are discussed in more detail below.

Credit Checks – Some of the lenders we feature run credit checks and some do not. Please check the individual profile of the lender to find out whether they indeed run checks. The reasoning behind running credit checks is because most payday lenders use the likes of Experian and Equifax to determine a customer’s eligibility. Everyone has a credit score and this is based on how well you have paid other forms of credit in the past such as phone bills, utility bills, credit cards and other loans. So if you have a good track record or at least some experience repaying other loans, your credit score will reflect this and contribute towards your payday loan application.

If you do not have a good credit score, there are indeed some payday lenders that don’t need to run credit checks to make a decision. Instead, they look at things like employment, age and previous loan history to make their decision and they may charge a slightly higher rate to mitigate risk. Be sure to check the individual lender pages on our site to see if they run credit checks or not.

If you would like to check your credit score, there are free trials available with Experian and Equifax.

Affordability – Several lenders have come under fire recently for not carrying our sufficient affordability checks. This is an area of underwriting which will likely be taken more seriously in the future.

Affordability checks is a way of checking that you can afford your loan. So if a customer has requested to borrow £500, the lender has a responsibility to check whether they can afford the loan amount and repayment. Examples of affordability checks include asking what the customer’s expenditure is during a regular month, calling the customer’s work number to confirm that they are employed and therefore earning a salary or similarly by requesting a customer’s pay-slip or bank statement. This allows them to match the amount the customers wishes to borrow with what they can afford to repay. An affordability check well executed will involve the lender giving the borrower a lower amount than what they have requested to borrow and so providing them with loan and repayment that they should be able to afford.

Your History/Trust Rating– Lenders will take into consideration your history with the company such as how many times you have applied with them previously, whether you have repaid on time and so forth. Some lenders use a ‘trust rating’ which means that you will be trusted more if you have repaid a loan or several loans in the past. A strong trust rating may allow you to borrow more than the typical threshold.

How Soon Will I Receive My Funds? 

Most lenders can transfer funds on the same day. We appreciate that payday loan borrowers make applications due to emergency expenses and bills and therefore same day funding is always desirable.

Depending on the lender, some can make instant loan decisions and send the funds to you within 15 minutes whereas some other lenders will take up to a full day. Some lenders will include an extra charge for same day funding, also known as Faster Payment.

As we mention in this page, some lenders will require further documentation in order to carry out relevant credit and affordability checks so you may be required to send over a pay-slip or bank statement and the sooner you respond, the sooner they can transfer your funds.

Repeat customers who have already borrowed from and repaid that specific lender may be entitled to faster payday loans because they have a higher trust rating and previous checks have already confirmed their affordability.

Possible Loan Decisions 


Funded can usually be sent on the same day.


If you have been declined, it may be that you did not meet the lender’s criteria and this may include not passing:

  • the minimum age requirement
  • the employment status e.g full time vs benefits
  • credit checks
  • affordability checks

Further Documentation Required

Lenders may require additional information such as statements/wage slips or photo identification before finalising the loan agreement

Affiliate Banners Appear When Decision Is Being Made

When affiliate banners or re-directions appear at the decision part of the application, this usually means that you have been declined and are being referred to another lender or broker. Some brokers charge fees of up to £70 for simply applying. Be sure to read the terms and conditions before putting in your application details again on another website.

We hope that this guide has provided some useful insight into how a payday loan application works. The Lenders List features over 30 payday lenders in the UK and our service is free to use. You can simply compare the cost of the each lender, click on their advert and be taken to apply directly on their website. As a reminder, we only work with direct lenders and we do not work with brokers or companies that will take unsolicited fees from your account for simply applying.

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