Weekly payday roundup: 7 days ended 23 nov 2012:
A new report investigating the state of the unsecured credit lending industry was revealed this week, discovering that lenders have been behaving quite badly.
The new report discovered that payday advance lenders have been taking cash from bank accounts without permission, threatening customers who miss repayment deadlines, and even rolling over payday loans not just two or three times but as many as 12 times. The report, which has been called ‘devastating’ by – well, by anyone who’s read it, honestly – said that these providers of short term loans are positively crippling borrowers, leaving them with debt so high that they can’t even pay their bills or buy food.
Of course, any payday lender trying to avoid being strung up has come out against the new report, trotting out the same tired line that this form of short term lending is a crucial public service for those who have been turned down for more traditional lending by banks. Lenders say that the majority of their customers are satisfied by their experiences, though an Office of Fair Trading investigation tells a different tale, with the number of complaints made by payday loan borrowers increasing by a massive 800 per cent over the past two years.
Not only that, but the OFT’s investigation found that many of these lenders were helping themselves to the contents of their customers’ bank accounts, essentially picking their pockets and leaving them with little to nothing to pay for essentials like food for their family or petrol for their car. Some lenders may even be encouraging their customers to put off repaying their loans and instead allowing the loans to be rolled over for an additional month – which may seem like a good idea in theory, but not when lenders tack on massive late fees and ballooning interest to the initial loan.
One example of this chicanery comes straight from QuickQuid, one of the nation’s largest payday lenders, who could roll over a £400 loan as many as five times over the course of two months. This would see a borrower’s debt increasing to an eye watering £1,286, well over thrice the original amount they took out from the lender, and with the OFT finding that 8 out of every 10 lenders neglect to see if their borrowers can shoulder the additional burden of a rolled-over loan, every single last drop of cash is being wrung from these borrowers by the short term lending industry as a result.