22nd October 2014
The lenders we feature on The Lenders List typically offer payday loans but in addition to this, some of our lenders offer payday loan products such as a FlexiCredit and FlexiPay. The products are similar in some ways but also very different. We appreciate that when people typically apply for the loans we recommend, they apply quickly because they need the funds for an emergency but they would benefit from understanding the loan products a bit better.
A payday loan refers to borrowing up to £1,500, usually for emergency purposes, and then repaying on your pay date which is the day you receive your salary. When a lender collects repayment, they want to ensure that you have money in your account which is why they typically try to collect on your pay date which could be the last working day of the month, a four-weekly basis or on a specific date of the month. Payday loans can be found in stores on the high street but since the rise of the internet, the industry is driven online with over 200 operating in the UK. Emphasis is on speed of funds which is ideal for people who need the money to fix broken boilers, car repairs or pay rent or bills that are urgent. But the speed of the application and funding process comes at a price and this means that payday loans are a more expensive than a standard bank loan and this is characterised by high APRs and daily interest rates of 1% or £130 per £100 borrowed.
Whilst most the lenders we display on our site are payday loans offering loans lasting up to 30 days maximum, several lenders are offering more diverse products with the likes of Peachy, Mr Lender, WizzCash and Pounds to Pockets offering long term instalment loan products. This is ideal for customers who think that they might be financially stretched if they had to repay the entire loan and interest in one lump sum at the end of the month. The chance to split repayments into instalments over 3, 6 or 12 months is very popular to help spread repayment.
So it’s clear how payday lenders have tried to diversify their products by offering instalment loans too. One payday loan option that is on the rise is FlexiCredit and FlexiPay. With specific focus on two lenders that we feature, Sunny and Quickquid, we discuss how their Flexi products work.
FlexiPay from Sunny is very simply an online credit card. You apply for up to £500 but instead of treating it like a £500 loan, you are given a £500 credit limit and you can draw down funds up to your credit limit whenever you need to. You have on-going access to this account so you can use as much as your credit limit as you want, similar to your credit card.
Sunny emphasise how you are in control and have 24/7 control: you can make use as much of your credit limit as you want, top it up or repay early and with extra fees. So keeping up with its name, you have the flexibility to repay whenever you want.
The video below shows Sunny’s recent TV advert and how they make it clear that they are different to payday loans:
This depends on your credit limit. Sunny will use affordability checks to assess how high your credit limit is. Affordability checks include taking an applicant’s salary and expenditure into consideration when assessing how much they can afford to repay. Some lenders request pay-slips or bank statements as part of their affordability checks.
The payments are very straightforward as you only pay interest on what you borrow.You can choose to use Flexipay as a payday loan and only borrow it for a few days but there is also the option to have the running credit account open for up to five months and repay in equal monthly instalments. Collections will be taken from your account via Continuous Payment Authority on your pay date.
As mentioned, you can repay early at any point and you will only be charged for the days you have had the account open. One thing that Sunny does which is interesting it that they offer a loyalty points system whereby the more times you pay on time, the lower your interest rate will be. New customers start paying a monthly interest rate of 29% but this can go down to almost half at 15% per month for customers who have accumulated the most points.
QuickQuid FlexCredit® is a running credit account very similar to the Sunny Flexipay product with slightly different terms. New customers may receive a credit limit up to £1000. Existing customers may receive a credit limit up to £1500.Similar to Sunny, you don’t have to use the whole amount, you’ll only pay for what you use or if you want to top it up, you may be able to ‘add to your credit limit’ without filling out the application again. The daily interest rate is 0.82% which is very close to the 0.8% price cap that has will introduced by the Financial Conduct Authority in January 2015. therefore suggesting that it is a very competitive price.
Quickquid FlexiCredit repayments are slightly different to Sunny’s. The minimum monthly repayment is 10% of principal amount that you borrowed plus interest accrued and 10% of any further drawdowns you may have made. It is constantly running, like a credit card, and is not limited to 5 months like with Sunny. Should you wish to top up, there is a button for “Take Out More Money” and to clear your account early, you can repay at any point but there are late fees involved. The video below is a video presented by Quickquid where they introduce FlexiCredit and how it works:
WARNING: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk