When you’re in a bind and need money fast, payday loans can seem like the perfect solution. But they usually come with high interest rates and there are often fees associated with these loans. So long as they’re paid back when they’re due, this extra cost is controlled.

The question is, are there any payday loans that are free from any fees? We’ve investigated.

What are no fee loans?

No fee loans are short term loans or personal loans that have no upfront or on-going fees attached to them. The amount you borrow with a no fee loan starts from £1,000 and can go up to as high as £25,000. You pay the loan back in fixed monthly instalments.

Although these loans don’t have any upfront fees, the interest rate you pay might be higher. And the lender will often charge you a late payment fee if you don’t make your payments on time.

What are no fee payday loans?

In the UK, Payday loans are a type of short-term credit. They should only be used when you need cash in a hurry to cover unexpected expenses or emergencies. The loans are usually for small amounts of money that tend to be under £1,000. You usually have to pay back the full loan at the end of the month.

But some lenders will let you spread your repayments over a few months.

Payday loans can be a convenient way to access credit, but they also come with risks. The biggest risk is that if you can’t repay the loan when it’s due, it’ll cost you. This is because payday loans tend to come with high interest rates and can have additional late payment fees. When this happens, it makes the debt harder to pay back.

Are payday loans with no fees real?

Yes, payday loans with no fees are real. But they’re an expensive way to borrow money as they tend to come with high interest rates. That’s why you should only use them as a last resort. If you’re stuck and need the money urgently, then compare lenders to make sure you get the best of the high rates.

What should I consider when looking for a no fees payday loan?

When you’re looking who to apply with for a no fees payday loan, look at the APR’s the lender is offering. Even though there might not be any fees, interest will be charged. Find out the total cost of the loan before you apply.

Lenders will give you this information before you submit your application. This is so that you know how much you’re going to have to pay back before you commit to the loan.

Other than comparing lenders, you should consider your own situation too.

1. Your credit score

Your credit score is an important factor when applying for a loan, it’s a reflection of your credit report. Lenders will look at your credit report to help them decide whether to approve your loan. If your credit score is poor, do what you can to improve it before applying for your loan.

2. Affordability

Once you know how much you want to borrow check you can afford to pay it back. The lender will tell you how much your repayments will be before you submit your application. If you miss repayments, it’ll hurt your credit score. Check you’re not borrowing more than you can afford to repay.

3. Income

You need to make sure your income is enough to cover all your outgoings as well as your new loan repayments. Some lenders won’t lend to you unless you’re earning above a minimum amount. For example, to be eligible to apply for a short term loan with Lending Stream you need a monthly income of at least £400.

How can I apply for a payday loan with no fees?

Almost all payday loan lenders are online. This means you can apply quickly without having to talk to anyone. There are simple steps to follow.

1. You enter your information on the lender’s online application form. You check you’re happy with your form and the terms of the loan, then you submit it.
2. The lender will check your information and they’ll run a hard credit check on you. This will leave a mark on your credit file showing that you’ve applied for a loan.
3. The lender will tell you if your loan’s been approved. The answer is usually quick, sometimes instant.
4. If approved, most lenders will send the money to you within 24 hours.

Do Lending Stream charge any extra fees?

Lending Stream don’t charge any fees for taking out a short term loan. There are no transaction or early repayment fees either. The only time you may be charged a fee is if you’re late making a payment and you don’t tell us about it. Even then it wouldn’t be more than £15.

Lending Stream make it easy for you to make payments to your loan. You can log in to your account and make payments at any time. You can pay the whole loan off early, and it won’t cost you any extra. In fact, if you do pay your loan off early you could save yourself some of the interest you’d otherwise be charged. 

What fees could I be charged on a payday loan?

There are three main types of fees you could be charged when you take out a payday loan.

1. An admin fee

This might also be referred to as a setting up fee. These fees aren’t very common these days among payday loan lenders. If you are charged an admin fee, it can be deducted from your loan amount or it can be added to it.

It’s always best to check if you’ll be charged an admin fee before you apply for your payday loan.

2. Late payment fees

If you miss a repayment on your payday loan, the lender will charge you a late payment fee. But this shouldn’t be more than £15.

If this happens, be aware of charges from your bank too. This is because the lender will attempt to take your loan repayment from your bank account when it’s due. If you don’t have enough money in there, your bank could charge you a fee.

3. An early repayment fee

There are some lenders who might charge you a fee for repaying your loan early. Although it’s not usual on payday loans, it’s still worth checking before you apply.

Don’t forget that interest will always be charged on payday loans and it’s likely to be at a high rate. You should always check what the lender’s fees and charges are before you apply.

What are the alternatives to no fee payday loans?

If you’re in need of some cash, a payday loan can be your last resort. But what other options do you have?

1. Defer buying what you need the money for

Is the money needed for something you can live without for a while? If you can manage without taking out a payday loan, it’ll be worth it. Finding other ways to save the money, like doing a side hustle will always be a better option.

2. Sell things you don’t use

We all have homes full of things we don’t need or use. By selling unwanted stuff you can raise quite a bit of cash. Check to see if you can get the money you need in this way and avoid getting into expensive debt.

3. Try the bank of mum and dad

Not everyone has access to this sort of help, but if you’re stuck and in need of urgent cash, perhaps your parents, or another family member could lend you the money. Set up a standing order to pay them back and it’ll cost you less than a payday loan.

4. Get a credit builder credit card

If your credit score’s not great, take out a credit builder credit card. If you can pay back what you borrow at the end of the month you won’t get charged any interest. It’s a cheaper way to borrow so long as you pay off the balance when it’s due.

What are the advantages and disadvantages of a no fee payday loan?

There are benefits to having a no fee payday loan, but there are some not so good points too. The table below lists some of the advantages and disadvantages of a no fee payday loan.

Final thoughts

Payday loans can be found without any upfront fees, but all lenders will charge you interest. And the rate of interest tends to be high.

But whatever the reason is for you needing one, a payday loan with no fees can get you the money you need, when you need it. It can be a lifeline when you’re facing financial stress. The key is to make sure you’re only using payday loans for emergencies, not for everyday spending.

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