What is The Criteria For a Payday Loan?

The main criteria for a payday loan in the UK are that you must be at least 18, live in the UK, have a valid bank account, provide proof of identity and address, and show a regular income (usually at least £500 per month) from employment or another reliable source so the lender can see you can afford the repayments. 

Lenders will also check how much you want to borrow, run a credit and affordability assessment, and may verify your details by phone before approving the loan.

These requirements are in place to make sure payday loans are only offered to people who can realistically repay them. 

Here’s how each part of the process works in practice.

The Basic Criteria For a Payday Loan

Before a lender looks at anything complicated like your credit score or spending history, they’ll check a few basic details to make sure you meet the minimum requirements. 

The basic criteria for a payday loan in the UK are standard across almost every UK payday lender:

• Age: You must be at least 18 years old.
• Identity: You’ll need to provide your full name, date of birth, and address.
• Residency: You must be a UK resident with a UK bank account and valid debit card.
• Contact details: A working phone number and email address.
• Loan amount: You’ll need to specify how much you want to borrow.
• Employment status: You should be employed either full-time or part-time, or show proof of a regular income.
  

If you can’t tick all of these boxes, most payday lenders won’t take your application any further.

Income Criteria: How Much Do You Need To Earn To Get A Payday Loan in the UK?

To qualify for a payday loan in the UK, you usually need to earn at least £500 per month after tax. This minimum income shows the lender that you can afford to repay the loan on time, which is essential since payday loans are typically due within a month. 

The money doesn’t have to come from full-time employment, part-time work, self-employment, or regular freelance income can also meet the requirement, as long as it’s stable and consistent. 

If your earnings are irregular or fall below this level, your application is more likely to be declined because the risk of missed payments is higher.

Employment Criteria: Do You Need a Job?

You don’t need to be in a traditional 9-to-5 job to qualify, but you do need to show you have a reliable source of income.

This could include:

• Full-time employment
• Part-time work
• Self-employment
• Regular pension payments
• Certain government benefits

The more predictable your income, the stronger your application will look. If you’re in temporary work or your hours change frequently, the lender might still approve your loan, but they could offer a smaller amount or charge a slightly higher interest rate to offset the risk.

Borrowing Limits: How Much Can You Apply For?

Most payday lenders in the UK offer loans ranging from £400 to £2,500.

First-time borrowers are usually offered smaller amounts, especially if they have limited credit history or a lower income. If you repay your first loan on time and build trust with the lender, you may be able to borrow more in the future.

The amount you’re approved for will depend on:

• Your income level
• Your existing financial commitments
• Your credit and affordability checks (more on that next)

Choosing how much to borrow and over what timeframe matters. Compare your options (see how to choose the right loan term for you) before signing.

After The Basics: Credit Checks And Affordability Checks

If you meet the initial criteria, the lender will then run two key checks before approving your loan: 

1. Credit check: This shows the lender how you’ve managed borrowing in the past — things like missed payments, defaults, or County Court Judgments (CCJs). Payday lenders are usually more flexible than banks, so a poor credit score isn’t an automatic rejection. But if your report shows serious unpaid debts, that could affect your chances.
2. Affordability check: This is a closer look at your income, outgoings, and monthly commitments to see whether you can realistically afford to repay the loan on time. Lenders use this to make sure the loan won’t push you into financial hardship.

Even if your credit isn’t perfect, you may have options. See how to get a loan with bad credit for more insight.

Phone Call Check: A Quick Verification Step

Some lenders might also give you a quick call before final approval. This isn’t always required, but when it happens, it’s usually just to confirm details like your employment status, monthly income, or the purpose of the loan. It’s a final step to make sure the information you’ve provided is accurate.

What If You’re Self-Employed, On Benefits, Or Have No Income?

Here’s where things get a bit more specific:

• Self-employed: Yes, you can still get a payday loan. You’ll just need to show evidence of consistent income — for example, bank statements or tax returns.
• On benefits: Some lenders will consider benefits as part of your income, especially if they’re regular and guaranteed. However, you may be offered a smaller loan amount or charged a higher interest rate.
• No income: If you have no regular income at all, your chances of approval are very low. Lenders are legally required to lend responsibly, and that means not approving loans for people who clearly cannot repay them.
• In the army: Being in the armed forces doesn’t prevent you from applying for a payday loan. As long as you meet the same income and affordability criteria, you’ll be treated like any other applicant.
  

In conclusion, payday lenders don’t expect you to have a perfect credit score or a high-paying job. What they do need is proof that you’re a responsible borrower who can afford to repay the loan without falling into financial trouble.

If you’re over 18, living in the UK, earning at least £500 a month, and can pass basic credit and affordability checks, you’ll likely meet the criteria for a payday loan.

The key is to be honest about your situation and only borrow what you know you can repay. Payday loans can be helpful in emergencies, but they’re not a long-term solution.