Credit Building > What are the lowest APR payday loans for bad credit?

What are the lowest APR payday loans for bad credit?

Wollit Team2 minute read · Updated 1st July 2024

A payday loan in the UK is a short-term, high-cost personal loan that provides quick cash but at incredibly high rates. For this reason, payday loans are a very risky and even "predatory" loan option. However, some providers do offer lower APRs.

Use them carefully – ideally, not at all.

What is the difference between a "bad credit payday loan" and a "bad credit loan"?

These two kinds of loans might seem very similar: they're both personal loans intended for people with bad credit.

But there are also some significant differences:

The main difference is that payday loans require a single lump-sum repayment on the borrower's next payday (hence the name), usually within 30 days. Bad credit loans, on the other hand, have longer repayment terms, ranging from 1 to 7 years, with fixed monthly instalments.
Bad credit payday loans are generally smaller, ranging from £50 to £1,000. Regular bad credit loans, on the other hand, can let you borrow up to £5,000 or even more, depending on the lender.
Bad credit payday loans tend to have very high APRs, ranging from around 9% to over 1700%. They also have higher interest rates and fees compared to standard personal loans, but not as extreme as these.

Payday loans are much shorter-term, smaller, and more expensive than regular bad credit loans, which are more long-term and offer higher amounts. The lines are getting blurry, though – these days, most payday loans can be repaid over several months instead of at the end of the month.

What is APR?

APR stands for "Annual Percentage Rate". In technical terms, it's the annualised interest rate charged on a loan, including any fees or additional costs. So, if you see a loan that advertises a 50% interest rate but 70% APR, that 70% includes both the 50% interest rate and all the additional fees. APR, in other words, is what you end up paying if you have a loan for at least a year.

APR can be confusing for loans shorter than a year, like payday loans. You have to look at what the actual repayment cost is for the time you borrow – not for the whole year.

What is the average APR for bad credit payday loans in the UK?

The average APR for bad credit payday loans in the UK varies quite a bit, but it is generally quite high.

For example, Sunny, one of the largest payday loan providers in the UK, states that its bad credit payday loans have a representative APR ranging from 9.3% to a whopping 1,721%, with the actual APR depending on your situation.

Remember that while the APRs for payday loans may seem astronomical, the cost of borrowing for the short loan period is more realistic. If you repay these loans on time and don't "roll it over" for a whole year, the actual cost won't be as high as the theoretical APR.

That doesn't mean payday loans are cheap—they're still the most expensive kind of loan you can get, and they should be a last-resort option.

What are the lowest APR payday loans for bad credit?

The best way to find the lowest APR bad credit payday loans is to go to a credit broker website, not a direct lender. That's because a broker website will run a soft eligibility check on your credit file and let you know your full range of options and how low your APR can be, depending on your actual credit score and situation.

Some of the largest credit brokerage websites for payday loans in the UK are:

However, you must be very careful when dealing with any credit broker or payday lender. Some brokers ask you to connect your bank account to verify your eligibility.

We have found many testimonials online from people who were charged a brokerage fee this way without permission.

The best way to stay safe is to ensure the credit broker you're using is registered with the Financial Conduct Authority (FCA).

Even so, we suggest you do not use payday loans if you can avoid it.