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Payday loans are a type of short-term borrowing. They’re generally paid back after a month – the next time someone’s paid – and usually range from £100 to £1,000.

We hear from people who’ve had trouble using payday loans. Some people say they can’t afford to repay their loan – and don’t feel the payday lender is treating them fairly. Some people don’t think they should have been given the money at all.

need to know

  • Because payday loans have high interest rates, someone’s money problems can quickly spiral if they fall behind with repayments. We’ll check the payday lender has followed the rules about adding interest and charges – and how often a loan can be extended or “rolled over”.
  • If someone tells their payday lender they’re struggling financially, the payday lender needs to respond fairly. This may mean freezing interest and charges or agreeing smaller, more affordable repayments.
  • Payday lenders often use “continuous payment authorities” to take payments from people’s bank accounts. There are rules that came in from July 2014 about how continuous payment authorities can be used. And if a payday lender hasn’t followed the rules, we’ll usually tell them to refund the money they’ve taken wrongly, as well as making up for the wider consequences of their mistake.
  • Some people tell us they don’t think they should have been given the loan in the first place. It’s very rare that we tell a payday lender to write off someone’s debt completely. But if we decide a loan wasn’t affordable, we’ll usually tell the lender to refund the fees and interest – meaning someone will only have to pay back the original amount they borrowed.
  • We sometimes hear from people confused that they’ve been charged fees relating to loans – but haven’t actually received any money. This is usually because they’ve used a credit broker. There’s more information on our website about how we sort out problems involving credit brokers.

thinking of complaining about a payday loan?

Juliana, ombudsman

image: John Morris, Zoe Harvey and Sam Rutherford


Many people who contact us about payday loans are embarrassed that they’ve got into difficulties. If people are struggling, it’s essential that they talk to their payday lender as soon as possible – so they can work out a fair, practical solution together.

We work closely with organisations offering free debt advice. And as part of sorting out payday loan problems, we can signpost people to the help they need to get their money back on track.

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