The danger of no check lending

No credit check payday loans can be dangerous – here’s why

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Search for payday loans with no credit check online and you’ll see a range of products from direct lenders and brokers, each claiming to offer cash with few restrictions. If you have bad credit or no income, no check loans can be tempting – but they’re best avoided.

Most short-term and payday lenders in the UK carry out some form of credit check, whether it’s a simple identity check to make sure you aren’t bankrupt, a soft check or a complete look at your credit history. These checks are a sign of responsible lending – in fact, they’re required by the industry regulator. At Sunny, our lenders also perform an affordability check for their short-term loans, which looks at your income and regular expenses to make sure you can meet the repayments.

What are the risks of using a no credit check lender?

Offering payday loans in the UK with no credit check breaches rules set out by the industry regulator – so any lender advertising such products is not regulated by the Financial Conduct Authority (FCA). It’s a clear sign that the company you’re dealing with may not be legitimate.

Borrow from a no credit check lender and you won’t be protected by FCA consumer rights rules. You risk paying higher interest rates and repayments are less likely to be affordable. In some cases, such illegal lenders use threatening tactics. For guaranteed payday loans with no credit check, these risks also affect your guarantor – who might be a friend or family member.

The Money Helper has a useful article about how to spot a loan shark and the alternatives.

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Representative 89% APR

Representative Example: Representative example: Amount of credit: £1000 for 18 months at £102.42 per month. Total amount repayable of £1843.60 Interest: £843.60. Interest rate: 89% pa (fixed). Representative 89% APR. Rates between 9.3% APR and 1721% APR – your no-obligation quote and APR will be based on your personal circumstances. Individuals with a good credit score may have access to cheaper interest rates. Interest rates associated with short-term loans tend to be higher than those of traditional personal loans. Loan term lengths from 3 to 36 months. Subject to lender’s requirements and approval.

Sunny Loans is a registered trading name of Upward Finance Limited, who is an appointed representative of Flux Funding Limited, who is a credit broker, not a lender. Loan repayment terms are 3-36 month loans.

Warning: Late repayment can cause you serious money problems. For help, go to www.moneyhelper.org.uk.

No check lending information hub

Want to know more about no check lending and why it is so risky? We’ve answered some of the common questions below.

  • Why do I need a credit check?

    You need a credit check when you apply to take out a loan so the lender can assess your history with credit – such as previous loans, credit cards and mobile phone contracts. Lenders use this information to work out how much risk is posed by a certain borrower. If you’ve proven you’re good at managing repayments, this will be reflected in your credit score.

  • What will the lender look for on my credit report?

    When a lender assesses your credit report, they’ll look for any defaults or late payments alongside your overall credit score. If you’ve taken out a large amount of credit in a short space of time, this can be a sign that further borrowing isn’t right for you – so this is something responsible lenders will be looking out for.

  • Should I only use a lender approved by the FCA?

    Yes – when you’re looking for a loan, it’s important to only consider lenders approved by the Financial Conduct Authority (FCA). This is because other providers are not regulated and are in most cases unauthorised. Unauthorised lending, including no credit check lending, is illegal in the UK. If you’re not sure a lender is legitimate, search the Financial Services Register to see if a firm is authorised by the FCA.

  • Does Sunny perform credit checks?

    While Sunny does not perform a credit search, the lenders that we share your application with do. Lenders perform credit checks on all applications for loans in line with rules set out by the Financial Conduct Authority (FCA). The type of check we use is what’s known as a soft credit check, which allows them to understand your situation without marking your credit report. They also perform an affordability check to make sure you can repay what you’ve asked to borrow.

Why choose Sunny?

If you decide a short-term loan is right for you, with Sunny you get the assurance of knowing we and our lenders play by the rules. There’s no pressure and there are no hidden fees and interest rates are transparent.

You can get the money you need transferred directly into your bank account today# if you are approved.

If you apply through Sunny there are no fees to pay. We don't charge and application or admin fees.

A market-leading panel of lenders give you the flexibility to borrow the amount you need and set your repayments to suit your budget.

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Apply for a short-term loan through Sunny and we will give you a quick decision from our panel of lenders. If you’re approved, you could receive the cash on the same day#.

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Representative 89% APR

Terms and conditions

A lender eligibility check will assess whether you meet their lending criteria. Even if you are eligible, they may still require proof of ID and/or proof of income before they approve the loan.