The cost of a payday loan is capped at 0.8% per day, which is equal to £24 for every £100 borrowed. This is in line with the price cap introduced by the FCA in January 2015. This gives potential borrowers peace of mind knowing that the cost of their loan will never exceed this amount and they will never have to repay double the amount that they have borrowed.
The price cap was introduced to avoid direct payday lenders charging too much for short term loans, with some lenders charging significantly more, but most charging around 1% per day.
In addition, it was common to offer ‘top-ups’ and ‘rollovers’ to keep people on revolving credit, which often doubled or tripled the amount owed and tied up borrowers