Sunny Loans Alternative from £100 – £5,000
Updated: September 30, 2024 Author: Paul Gillooly

Sunny Loans was a UK-based payday lender offering short-term loans to consumers in financial need.
Launched in 2013, Sunny provided fast, unsecured loans for those facing unexpected expenses or short-term cash flow problems.
Payday loans like those offered by Sunny became popular because they promised quick access to cash without lengthy approval processes.
However, Sunny Loans faced significant challenges due to growing scrutiny of the payday loan industry, especially with concerns over high interest rates, debt traps, and the treatment of vulnerable customers.
In this guide, we’ll explore the history of Sunny Loans, how it operated, why it went into administration, and the key takeaways for consumers who are considering short-term borrowing options today.
History of Sunny Loans
Sunny Loans was a brand under the company Elevate Credit International Limited, which was part of the US-based Elevate Credit, Inc.
The company was one of many in the UK that capitalised on the demand for short-term lending after the 2008 financial crisis.
As banks tightened their lending criteria, payday lenders emerged to offer alternative financing for people who couldn’t access traditional credit options.
Sunny Loans differentiated itself from other payday lenders by offering more transparency and flexibility in its lending terms.
Unlike many of its competitors, Sunny claimed to not charge late fees, and they offered flexible repayment options that allowed borrowers to repay early without additional charges.
Despite these features, Sunny still operated within a market criticised for its high-interest rates and potential to exacerbate financial hardship.
How Sunny Loans Worked
Sunny Loans offered short-term, unsecured loans ranging from £100 to £2,500, with repayment periods between 6 and 14 months.
The loans were designed for people who needed quick access to cash but couldn’t or didn’t want to borrow from traditional lenders like banks.
Loan Application Process
The application process for a Sunny loan was straightforward:
- Online Application: Borrowers applied online through Sunny’s website. The application form required basic personal and financial details, such as proof of income, employment status, and bank account information.
- Credit Check: Although Sunny Loans claimed to serve people with less-than-perfect credit, they still conducted credit checks. This allowed the lender to assess the borrower’s ability to repay the loan and ensure that lending was done responsibly.
- Approval and Disbursement: Once approved, funds were typically transferred to the borrower’s bank account within 15 minutes. The speed of disbursement was one of Sunny’s key selling points, especially for those facing urgent financial needs.
- Repayment: Repayments were made through fixed monthly instalments over the agreed loan term. Borrowers could repay early without incurring extra fees, which set Sunny apart from other payday lenders who often charged penalties for early repayment.
Interest Rates and Costs
Sunny Loans was known for its high APR (Annual Percentage Rate).
While the company advertised representative APRs around 1,247%, some loans carried APRs exceeding 1,200%. Despite the high rates, Sunny marketed itself as a responsible lender that provided transparent pricing with no hidden fees.
For example, a loan of £1,000 taken over 12 months could cost around £1,700 in total repayment, depending on the loan term and interest rate applied.
The high cost of borrowing was a significant factor in the downfall of many payday lenders, including Sunny, as they came under increased regulatory scrutiny.
The Rise of Payday Lending Regulations
Payday lending became controversial in the UK due to concerns over the industry’s treatment of vulnerable borrowers.
Many customers found themselves trapped in cycles of debt, borrowing more to cover previous loans, and facing financial hardship due to exorbitant interest rates and fees.
In response to these issues, the Financial Conduct Authority (FCA) introduced a series of reforms starting in 2014.
Key Regulatory Changes
- Price Cap: In 2015, the FCA introduced a cap on the cost of payday loans. The total cost of a loan, including interest and fees, was limited to 100% of the amount borrowed. This meant that borrowers would never have to repay more than double the original loan amount.
- Interest Rate Cap: The FCA also imposed a cap on interest rates, limiting lenders to charging no more than 0.8% per day on the amount borrowed.
- Affordability Checks: Lenders were required to conduct stricter affordability checks to ensure that borrowers could repay loans without falling into financial difficulty.
- Rollovers: The FCA restricted lenders from rolling over loans more than twice. Rollovers were a practice where lenders extended the repayment period in exchange for additional fees, which often resulted in borrowers accumulating more debt.
Impact on Sunny Loans
These regulatory changes significantly affected Sunny Loans and other payday lenders.
With stricter affordability checks and caps on interest rates and fees, many payday lenders found their business models less profitable.
Sunny Loans tried to adapt by offering more flexible repayment terms and promoting transparency, but the high cost of borrowing remained a challenge.
The Decline and Administration of Sunny Loans
In June 2020, Sunny Loans went into administration, joining a growing list of payday lenders that had collapsed in the wake of tighter regulations and increasing complaints from customers.
The company cited several reasons for its demise, including the financial impact of compensating customers who had been mis-sold loans.
Why Did Sunny Loans Go into Administration?
- Customer Complaints and Compensation Claims: A significant factor in Sunny’s downfall was the volume of customer complaints regarding mis-sold loans. Many customers claimed that Sunny had failed to conduct proper affordability checks and had lent money to people who couldn’t afford to repay. These customers were entitled to compensation, which placed a considerable financial burden on the company.
- Regulatory Pressure: The FCA’s tighter regulations made it harder for payday lenders like Sunny to operate profitably. The price caps and the requirement for rigorous affordability checks reduced the volume of loans that Sunny could issue, limiting their revenue.
- COVID-19 Pandemic: The onset of the COVID-19 pandemic in 2020 exacerbated Sunny’s financial difficulties. Many borrowers faced economic hardship due to the pandemic, increasing the number of defaults and reducing the company’s cash flow.
- Market Competition: The payday loan market became increasingly competitive, with alternative short-term lenders offering more affordable or flexible products. This competition, combined with Sunny’s own financial challenges, made it difficult for the company to survive.
What Happened to Sunny Loans Customers?
When Sunny Loans went into administration, existing customers were still required to repay their loans, and the administration process aimed to ensure that debts were recovered.
However, for customers who believed they had been mis-sold loans, the administration process offered a route to seek compensation.
Compensation Claims
Customers who were mis-sold loans by Sunny could file claims for compensation.
The administration process allowed affected borrowers to seek redress, particularly if Sunny had failed to assess whether loans were affordable.
Many customers were able to have interest and charges refunded or written off.
However, the administration process also meant that there was no guarantee all customers would receive full compensation.
As with many other payday lenders that went into administration, the final amount paid to customers often depended on the assets available after the company’s other creditors were paid.
Ongoing Loan Repayments
For those who still had outstanding loans, repayments had to continue as usual.
The administrators took over the management of the loans, and failure to repay could still result in negative consequences, such as damage to the borrower’s credit score or legal action.
Lessons for Consumers from the Sunny Loans Collapse
The collapse of Sunny Loans highlighted several important lessons for consumers regarding short-term borrowing:
- High-Cost Credit Can Be Risky: Payday loans often come with high interest rates and fees, which can make it difficult to repay if you’re already in a precarious financial situation. It’s crucial to fully understand the cost of borrowing and to consider whether you’ll be able to repay the loan without causing further financial strain.
- Regulation Is Important: The FCA’s regulations have made the payday loan market safer for consumers by capping fees and requiring lenders to conduct proper affordability checks. Before borrowing, ensure that your lender is FCA-regulated and adheres to these rules.
- Always Check Affordability: One of the key problems that led to Sunny’s collapse was its failure to properly assess whether customers could afford their loans. As a borrower, it’s essential to consider whether a loan is affordable based on your income and existing financial commitments.
- Consider Alternatives: If you need short-term financing, consider alternative options before turning to a payday lender. Many credit unions, for example, offer more affordable loans with lower interest rates. Additionally, some banks and building societies now offer small loans with more reasonable terms for those in need.
Conclusion
Sunny Loans served as a notable example of the risks and rewards of the payday loan industry in the UK.
While it offered a quick solution to financial emergencies, it ultimately faced the same challenges as many other payday lenders—high costs for borrowers, regulatory scrutiny, and customer complaints about mis-sold loans.
For consumers, the collapse of Sunny Loans underscores the importance of understanding the true cost of borrowing and exploring all available options before taking out a payday loan.