Payday loans work much like any other loan. The borrower applies for a loan, selecting the amount they want to borrow and the length they want to borrow it for. Unlike more traditional loans, the amount borrowed and the length of the loan are comparatively small. Interest is charged and additional fees will generally not apply if the loan is paid back on time. Some lenders levy fees for late payment, but the Financial Conduct Authority has introduced a price cap meaning borrowers will never pay back more than twice what they borrowed.

Virtually every adult in the UK has a credit report. This is a log which details your use of credit, including information on everything from unpaid phone bills, to credit card usage, bankruptcy, use of debt management, who you share accounts with – and much more. Lenders use this report to gauge whether or not you are a responsible user of financial products and to decide whether you are likely (or able) to make repayments on a loan. If you have bad credit, you may find it difficult to access financial products like payday loans.

Any adult over the age of 18, living in the UK, with a bank account can apply for a payday loan in this country. However, not every applicant will be accepted. Any good lender will perform a credit check and an affordability check to make sure you can afford to take on the loan you are requesting. If you have bad credit, or the requested loan is judged to be beyond your financial reach, you will not be accepted.