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Payday Loan Contract for the United Kingdom

Payday Loan Contract Template for England and Wales

A legally binding agreement governed by English and Welsh law that establishes the terms and conditions for a short-term, high-cost loan between a licensed lender and borrower. The contract complies with FCA regulations, including mandatory price caps, affordability checks, and consumer protection measures. It details the loan amount, repayment terms, interest rates, fees, and default procedures while ensuring compliance with the Consumer Credit Act 1974 and related legislation.

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Payday Loan Contract

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What is a Payday Loan Contract?

The Payday Loan Contract Template is designed for use by licensed lenders operating in England and Wales who provide short-term, high-interest loans to consumers. This document ensures compliance with strict FCA regulations, including the price cap of 0.8% per day and the total cost cap of 100% of the borrowed amount. The template incorporates mandatory consumer protection measures, clear repayment terms, and transparent fee structures as required by the Consumer Credit Act 1974 and related legislation. It's specifically structured to meet the unique requirements of payday lending while protecting both lender and borrower interests.

What sections should be included in a Payday Loan Contract?

1. 1. Parties: Identification of lender and borrower with full details

2. 2. Background: Context of the loan agreement and purpose

3. 3. Definitions: Key terms used throughout the agreement

4. 4. Loan Amount and Terms: Specific amount, interest rate, APR, and repayment date

5. 5. Repayment Provisions: Details of how and when repayment should be made

6. 6. Interest and Charges: Breakdown of interest calculation and applicable fees

7. 7. Default Terms: Consequences of missed payments and default procedures

What sections are optional to include in a Payday Loan Contract?

1. Early Repayment: Terms for early repayment of the loan - include when early repayment options are offered

2. Security: Details of any security provided - include when loan is secured against assets

3. Insurance: Optional insurance provisions - include when payment protection insurance is offered

What schedules should be included in a Payday Loan Contract?

1. Schedule 1: Repayment Schedule: Detailed breakdown of repayment dates and amounts

2. Schedule 2: Fee Schedule: Complete list of all possible fees and charges

3. Appendix A: Pre-Contract Information: Standard pre-contract information required by FCA

4. Appendix B: Continuous Payment Authority Details: Terms and conditions for CPA if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions



































Clauses



























Industries

Consumer Credit Act 1974: Primary legislation governing consumer credit agreements in the UK, including payday loans. Sets out the framework for licensing, regulation and consumer protection.

Financial Services and Markets Act 2000: Establishes the regulatory framework for financial services in the UK and provides the FCA with its enforcement powers.

Consumer Rights Act 2015: Consolidates consumer protection law, including unfair terms in consumer contracts and transparency requirements.

FCA Price Cap Rules: Limits initial cost to 0.8% per day, default fees to £15, and total cost cap to 100% of borrowed amount.

Affordability Assessment Requirements: FCA requirement to conduct thorough creditworthiness assessments before lending, including verification of income and expenses.

Pre-contractual Information Requirements: Mandatory information that must be provided to borrowers before agreement, including APR, total amount payable, and risk warnings.

Continuous Payment Authority (CPA) Rules: Restrictions on the use of CPAs, including limits on repeated payment attempts and requirements for customer notification.

Early Repayment Rights: Consumer right to repay the loan early with reduced interest and charges, as per Consumer Credit Act provisions.

Default Management Requirements: FCA rules on treating customers in financial difficulty, including forbearance measures and fair treatment policies.

Complaint Handling Procedures: Requirements for handling customer complaints, including Financial Ombudsman Service (FOS) referral rights.

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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