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Tradesmen turn to short term loans in greater numbers

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Thanks to traditional High Street lenders turning their backs on small businesses in the UK, tradesmen have been taking out short term loans in greater numbers from pawnbrokers and payday advance providers, industry experts report.

One of the nation’s largest pawnbrokers and payday loan providers, Albermarle & Bond, recently said that shopkeepers, decorators, painters, and white ban men were turning to pawnbroking services in increasing volume, eschewing their bank and instead pawning their watches and gold for quick loans.

In fact, such loans had increased by double over the past three years, according to Barry Stevenson, A&B’s chief executive. The firm’s own research found that around 38 per cent of the British population would consider turning to a payday lender or a pawnbroker for their financial needs.

According to historical statistics concerning pawnbroking use, only one out of 100 Brits have paid a visit to a pawnshop. However, one major online payday lender said that nearly half of its customers stated that payday lending was their ‘first choice’ for credit, while Mr Stevenson added that the number of Brits that have come to consider alternative forms of credit, such as pawnbroking and payday lending, has undergone a dramatic increase.

The chief executive remarked that people are no longer turning to friends, family, or the bank if they need help, such as a tradesman who’s on a job and the exhaust on their vehicle goes. Instead, more tradesmen have been turning to pawnbroking firms and payday lenders.

Half-year results for A&B demonstrated a 22 per cent increase in profits to the tune of around £36.5 million. Gold-buying and pawnbroking profits both rose over that same period of time, the results report.

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Don’t turn to loan sharks to escape debt, experts warn

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Experts have recently warned families desperate for cash loans to not turn to illegal loan sharks as a way to escape debt.

Many people across the UK have been looking for quick loans in order to make ends meet lately. Those in Sussex have been hit especially hard, with the result that local credit unions have stepped forward in an attempt provide succor to some currently courting loan sharks for their financial needs.

Savings and loans co-operative West Sussex Credit Union has announced it has set up ‘Life Raft’ loans in order to provide help to those in need of some extra money in between pay periods. The payday loan is not so different than you would find from most other payday lenders operating in the UK, though credit unions and reputable payday lenders alike have been highly critical of unscrupulous lenders charging exorbitant rates to borrowers and providing access to credit to those who cannot easily repay such loans.

Credit unions and payday advance lenders may seem like strange bedfellows for uniting in condemnation of disreputable lenders, especially in light of new regulations being passed recently that grant more permission to credit unions. The new, more permissive rules allow credit unions to compete directly with financial services providers by allowing them to relax membership rules, offer paid interest instead of just dividends, and other similar changes.

Many credit union proponents welcomed these regulatory reforms, and efforts have been undertaken nationwide to begin billing credit unions as a viable competitor in the financial services industry by positioning the services offered by them somewhere in between the faceless, cookie-cutter High Street providers and the flexibility offered to customers by payday lenders.

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20% of mums go hungry to provide food for her kids

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According to a recently conducted research survey, one out of every five mothers in the UK regularly misses meals in order to provide enough food for her children, no credit check payday loans experts recently reported.

The new study further indicated that 25 per cent of British families are relying on short term loans or credit cards in order to make ends meet, and that 64 per cent of families have less money coming in to pay bills and to purchase other necessities than they did 12 months ago. The research, which was carried out by Netmums, discovered that a full seven out of every 10 families in the UK are teetering on the edge of financial ruin, and face economic crisis if even the smallest thing changes in their finances, let alone the kind of major emergency expense that would require the taking out of a payday loan.

In fact, Netmums discovered that 5 per cent of British families have had to rely on payday lenders on a regular basis in order to make ends meet, while one out of every 100 have had no choice to turn to illegal loan sharks to keep afloat. Netmums, the largest parenting site in the UK, conducted a research survey of in excess of 2,000 mothers to compile their statistics.

The research results, which many industry experts have referred to as ‘worrying,’ also discovered that nearly 50 per cent of UK households have had to pawn or sell goods in order to keep their heads above water. This has taken its toll on British parents, with 16 per cent needing treatment for stress-related illnesses brought about by financial worries.

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MyBnk empowers children with finance knowhow though loans

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World travel broadens the mind, so they say. And the experience really made a difference to Lily Lapenna who created a payday loan firm with a difference five years ago, derived from her experience working for a non-governmental organisation in Bangladesh.

Lily, of Italian parentage, London upbringing and French tuition hit upon the idea of learning children from a very early age about the strength of making small investments work to reach a desired platform – by lending them small business loans with real money in order that they could see their seedling ideas blossom, once they secured the loan from Lapenna’s finance institute, MyBnk. Obviuosly, there is little use of a credit check for some children in the target bracket, which is why it is the strength of the idea and the team’s conviction that will secure them the finance.

To run in conjunction with that stage of the process, which has to meet other certain criteria from the group of 11-25 year olds before they are accepted for any loan just like in the real world, Mybnk also hosts money workshops, which will hopefully create the pint pot entrepreneurs a strong series of their own paydays in the future.

Micro-finance has a massive bearing on projects in Bangladesh, where every tiny piece of money is managed and made to work within the system. Many consumers in the UK who are in financial hardship and struggling with credit cards and regularly relying upon payday loans to get them from one payday to the next would do well to incorporate this type of management into their household budget.

It is this concept, but in a business project sense, that Lily Lapenna and MyBnk is trying to indoctrinate youngsters with to help them avoid the pitfalls that those who now rely on short term loans and high APR credit have fell into. And, of course, learning the importance of how money affects all levels of a business, no matter how big or small.

However, Lily recognises the importance of coaching – not running or administering – a business, as finance issues can just seem extremely boring to children fresh out of primary school. To meet the lending criteria, the business idea has to meet reality and relativity objectives so that the learning curve the children will go through will help them retain focus throughout the longevity of the project. To enhance that possibility it is usual that an element of competition is injected with every loan – such as: this is your slice of the pie, the same as theirs; your slice has got to end up bigger than that one.

To date, 500 loans of between £10 – £300 have been issued in this manner, all against a deadline for project fruition. The accompanying financial awareness program, covering student debt to acquiring mortgages, has reached over 37,000 children and Lily wants to now take this further and plans to franchise the set up across the UK before taking on the world.

With so many people reportedly taking to payday loans over the course of this year, that roll out can’t come quickly enough.

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Payday advance lenders grow in success, draw criticism

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While payday advance lenders have been growing more popular and successful due to the current economic landscape, the amount of criticism they have drawn has also increased to keep pace with their new popularity, instant cash loans experts recently reported.

Approximately two million Brits reported taking out a payday loan sometime in 2011, according to data compiled by industry leaders. These same leaders feel that the figure could increase to 3.5 million before the end of 2012 as household incomes continue to be squeezed and unemployment rates also continue to rise, and PriceWaterhouseCoopers predicts that payday lending will soon outstrip credit card use if this trend continues.

Many feel that payday lenders charge interest rates that are extortionate, especially when those who are in the largest need of extra funds are low income earners that may struggle to repay their loans. Critics say that people already drowning in debt could be even worse off after taking out a payday loan, as failing to repay the loan in time normally results in hefty charges and fees.

However, payday lenders are being painted with too broad a brush, according to the PwC report, which said that an increasing number of Brits are attracted to the loans due to their flexibility in comparison to traditional lending. This means that a blind crackdown on the payday lending industry could do more harm than good by limiting access to credit for those who cannot or will not approach a high street lender for the funds they need.

There is no easy answer to the problem, experts say, as the payday lending industry needs to be regulated in a responsible manner in order to ban the more unscrupulous and predatory firms from operating as swiftly as possible. While many feel that focusing on how high interest rates are on these loans is helpful, consumer protections should instead be instituted to ban interest roll-over and instead encourage fairer methods to repay debt, experts say.

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More Brits turning to pawnbrokers for short term loans

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More and more Brits that have been struggling to make ends meet have decided to turn to pawnbrokers for short term loans, industry experts say.

Cash Converters, a high street pawnbroker that provides instant cash loans to customers, saw its personal loan book in the UK grow almost four times last year from its value in 2010, with 2011 figures rising to £8.5 million, up from £2.3 million. The firm, with 208 stores in the UK alone, launched a new process for taking out online loans this past October and has already reported that early results have been ‘promising.’

According to the firm’s figures, an overwhelming 96 per cent of those making online applications for credit were new customers, indicating that alternative forms of credit such as pawnbrokers and payday loan providers have grown by leaps and bounds over more traditional lending sources such as bank loans. These sources of alternative lending may have higher interest rates associated with them, yet consumers see them more convenient – especially for those whose credit histories have suffered in the wake of the economic downturn.

However, bad credit and high interest can be a bad combination for some lenders. Customers failing to pay back Cash Converters loans increased by more than 20 per cent in the second half of 2011, with 11 per cent of the total amount being lent out being comprised of bad debts.

As a result of the increase, Cash Converters has decided to take steps to bring down bad debts. The pawnbroker has instituted stricter lending criteria as well as appointing a dedicated collections manager and overhauling their customer database.

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Top tips for those considering taking a payday advance

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If you’re thinking about taking a payday advance in order to deal more easily with a sudden expenditure or financial emergency, industry experts have recently come forward with some top tips that you should keep in mind before you sign on the dotted line and take out a payday loan.

Experts say that first of all you should never simply decide to take out a loan form the first firm that you find in your search. Even if you have an urgent need for the funds, you need to take your time in order to avid making a poor decision, and you should shop around and compare the rates on several short term loans in order to find the lender that offers you a service that matches your needs as closely as possible.

Once you’ve decided upon which lender you’re going to borrow from, ensure that you read all the information you can as carefully as possible. Don’t rush through in your haste to gt the process up and running – in fact, experts say you should take the time and read everything twice if you can, in order to gain a more perfect understanding of the lending agreement so you can avoid any problems in the future when it comes time to repay the loan.

Experts also recommend making sure that the lender you’ve selected is easy to communicate with. You need to be able to contact your lender without having to jump through hoops in the event that you need assistance regarding your loan, so don’t make a bad situation worse by selecting a lender that is hard to contact.

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Experts say instant cash loans should be repaid responsibly

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Instant cash loans taken out from payday lenders need to be repaid in a timely and responsible manner, payday loan experts say, as missing repayment deadlines can result in serious difficulties arising from costly fees and charges.

No credit check payday loans provide a much needed service for those Brits who find themselves weeks from their next pay cheque but still in need of cash in order to help pay for a financial emergency. However, since these loans are unsecured, lenders try to discourage late or missed repayments by making charges and fees for doing so very high, and this can lead to long-term problems if borrowers do not take their obligations for repaying short term loans seriously.

Reputable payday lenders always take steps to inform prospective borrowers of the full consequences for taking out a payday loan, including the costs of repayment – and the hefty fees neglecting to repay the loan on time will entail. However, some payday advance providers have been under fire lately from critics and honest lenders alike for predatory lending practices, as some have been advertising their loans for frivolous reasons, such as nights out, shopping trips, or even cosmetic surgery, wagering that certain classes of low income earners, such as students and the military, will be enticed into taking out a loan that they cannot easily repay.

The Money Advice Trust’s media officer, Paul Crayston, said that any Brits looking to take out such loans need to be wary of these firms that are brazenly targeting people and encouraging them to take out loans without a good reason. Payday lending is most often used by those who cannot avail themselves of traditional sources of finance, Mr Crayston said, but taking out a payday loan should be a matter of last resort and not something to finance an evening out on the town.

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Government to drop SME bank lending targets

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The Government is expected to drop small and medium-sized business lending targets in the face of evidence that lending to SMEs is down despite the Project Merlin initiative, and in fact the number of small loans being made across has declined across the board.

The Bank of England is expected to publish the final project figures for the initiative, which are understood to demonstrate that bank lending declined in 2011 by £9.6 billion from 2010′s £179 billion figure. Also, 2012′s lending activity – particularly short term loans made to SMEs – is expected to fall by 5.7 per cent, according to Ernst & Young.

This has led firms to turn to alternative sources of lending, such as payday loan providers, crowdfunding webisites, and invoice auction websites. In order to regain market share, some traditional lenders have taken more innovative approaches in select instances, such as entering into agreements to lend against goodwill, customer relationships, brand value, intellectual property rights, and other intangible assets, which is a marked departure from more traditional lending where providers ask for a borrower to guarantee a loan against the business in question’s physical assets, such as equipment or property, or even the personal assets of a borrower, such as their house.

Accountancy group Corporate Finance Network’s chairman and founder, Kirsty McGregor, said that banks have traditionally only taken security over physical assets, but some have chosen to instead lend on intangible ones in an effort to provide better access to credit to companies in need of capital for growth. However, the chairman did warn that lenders will need to make clear value determinations prior to lending, most likely accomplished by assessments carried out by experts.

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Lenders forced to change their tactics after investigation

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A number of payday advance lenders were forced to change their tactics after a recent investigation discovered they may be breaching advertising codes, payday loan experts recently reported.

These lenders were found to be offering instant cash loans in order to fund purchases of frivolous nature, such as cosmetic surgery of High Street shopping sprees, even though reputable lenders have always insisted borrowers should only take out a payday loan if they need quick cash to cope with a sudden financial emergency. Two online affiliate lending sites have taken down images of younger women loaded down with the spoils of a day out at the shops after the investigation was made public, and lenders have been severing their links with the affiliates after complaints made by the Advertising Standards Authority were upheld against them for trivialising the decision to take out a payday loan.

Other affiliates had advertising copy on their websites that were also accused of treating the lending process in a trivial manner by not only including images of young women bearing shopping bags stuffed to bursting but by listing ‘cosmetic surgery’ under the many reasons to take out a payday loan. Reputable lenders wasted no time in condemning the adverts, stating that payday advance loans, while invaluable in the event of a sudden need for cash that would otherwise be impossible to come by, should never be used for spurious reasons such as funding nights out at the pub, cosmetic surgeries, shopping trips, or anything similar.

In related news, many campaigners have been lobbying the Government to institute interest rate caps on payday lenders in order to protect the interests of borrowers in the UK.

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Bank lending to fall, payday advance firms to reap benefits

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With Ernst & Young stating that bank lending set to fall, hitting consumers hard for the first time in three years, payday advance firms are set to reap the benefits of the sudden vacuum in the quick loans industry.

E&Y’s research estimates have made the suggestion that businesses will be likely to bear the lion’s share of the contraction, with corporate sector lending could decvline by around 5.7 per cent in 2012. In addition to commercial real estate and small businesses, personal customers will most likely be hit hard by the lending drop-off, especially those who are ineligible for standard credit terms, and many of these personal banking customers are expected to turn to payday loan companies in order to fulfill their needs.

A separate survey, conducted by the CBI, discovered that SMEs in the manufacturing sector found their orders drop at the steepest level in mroe than two years as the eurozone crisis sparked rising fears. The survey also found that as output stagnated due to demand levels dropping through the floor in the last three months of 2011, optimism declined for the third month in a row.

The ITEM Club from Ernst & Young also issued warnings that the UK could be at the forefront of a financial transaction tax instituted by the EU, even in the event that the Government declines to adopt such a tax. The ITEM Club’s senior economic adviser, Neil Blake, said that the last time that the economy was impacted by deleveraging of banks was in 2009, when the global financial crisis was in full swing.

Total bank loans are expected to contract in 2012 by 2.2 per cent, according to E&Y’s predictions. 2013 growth figures are predicted to be only 0.9 per cent, which is a massive difference from 2011′s estimated 4.3 per cent increase.

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Major payday advance lender warns against unscrupulous firms

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One major payday advance lender has warned that UK consumers need to guard against less-than-honest firms that may be nicking cash from their accounts.

The no credit check loans industry, which has been increasingly under fire from consumer groups and the Government, struck back against unscrupulous firms that are giving honest payday loan providers a bad name. Rogue operators are taking advantage of growing demand for short term loans, the payday advance lender said, with its sales and marketing manager, Ian Porter, remarking that the lender has heard ‘horror stories’ from many customers as they relate the terrible things they’ve experienced with dishonest lenders.

Mr Porter related the tale of one customer who actually alerted the police after paying one of these lenders a £100 ‘loan processing fee,’ only to find that not only was the loan not forthcoming but hat the firm had used his bank details to clean out his bank account. The shortfall in the customer’s account prompted him to call in the police, and as a result the company is currently under investigation.

Mr Porter was critical of campaigners who he said focussed on ‘bogus’ issues, such as high interest rates, especially since the relevance of an annualised interest rate on a short term loan is nonexistent. Instead, the sales and marketing manager said that these campaigners need to shift their focus to rooting out the dishonest operators that are attempting to take advantage of one of the swiftest growing financial sectors in the UK.

Industry experts predict that, over the past 12 months alone, as many as two million Brits have availed themselves of payday advance lending.

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Customers drawn to providers of quick loans

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Borrowers are being drawn in increasing numbers towards more agile and smaller providers of quick loans, according to a new report from PricewaterhouseCoopers.

According to PwC, payday loan companies could eclipse credit cards in popularity, becoming a mainstream borrowing method within the UK. The sudden explosion of borrowers seeking payday advance lending can be traced to an inability to rely upon traditional lending, such as credit cards.

However, payday lending, which has up until recently been the purview of low income earners with higher risk profiles, the innovation and convenience offered by these loans have worked to attract a more prosperous and broader range of customers, with traditional High Street lending suffering as a result. PwC director, Simon Wescott, remarked that while payday lending may have initially been seen as a ‘last resort’ loan, mainstream lenders need to realise that an increasing number of customers are pleased at the innovative and convenient service provided to them by these more agile and smaller lending providers.

In fact, Mr Wescott predicted that payday lenders are likely to make further forays into the financial market by offering more conventional products with longer loan terms such as credit cards. The PwC director also said that current accounts could be in the future for payday lenders as well, something that could be seen as a serious threat to the ‘Big Five’ high street banks that currently hold 80 per cent of the current account market.

While many lenders have been under fire from detractors for allegedly targeting classes of borrowers by purposely encouraging them to take out loans that would be beyond their means to pay, consumers with economically-linked anxiety find the limited size and length of payday lending appealing, said Mr Wescott.

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Will new FLA regulations make a difference?

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Payday loan companies have been under fire as more and more disreputable payday advance lenders take advantage of groups such as students, leading the Finance and Leasing Association to revise its regulations – but many feel these new rules will make little difference to those victimised by these rogue lenders.

The new rules cover many providers of high interest credit in addition to the short term loans provided by payday lenders. Measures such as banning commission payments for the sale of store cards by shop staff and delaying benefits such as discounts for at least a week after a store card is taken up by a consumer were put into effect, as well as those to aid customers facing financial distress, particularly customers with mental illnesses and her mental disabilities.

Lenders are now required to increase the transparency of their loans in regards to costs prior to approving a loan, including the reiteration of the fact that payday lending is ideal for short term borrowing but is decidedly inappropriate for longer term needs. Payday lenders are also now restricted to extending or ‘rolling over’ short term loans more than three times, and the new regulations require that new credit assessments be carried out each and every time.

While all fifty members of FLA that operate within the consumer credit markets are bound to follow the code, critics say that it will do little to curb the rise of underhanded payday lenders that ruin the reputation of those operating more responsibly. This is because there is only one major payday loan provider within the FLA, with three quarters of the market instead under the aegis of the Consumer Finance Association.

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EU Student unpaid debt stands at £20M and rising

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In the heated debate that followed Wonga’s u-turn on its advertising over payday loans to students, it may come as little surprise that students from the European Union who have taken out loans to study in the UK are not paying their fees back either.

The loans, lent in good faith, are due to be paid back imminently. The issue, according to a recent report, is that almost a half of the students who have taken out such loans (45%) are either untraceable or have already fell into arrears. That leaves the financiers with some tough decisions as more and more students are applying for similar loans to fund their studies in this country.

The courts are hardly proving a viable way to recapture the money, either. Sky News requested the figures on the loans from the government under the freedom of information act and were duly obliged. There is no suggestion that the government tried to keep these loan figures under their hat, but if they had, it would be no surprise given the backlash payday lenders felt after the scandal of high interest rate loans offered on a short term basis to UK students earlier this year.

Higher education loans have been on offer to EU students wishing to gain their further qualifications in the UK since 2006. With the suspended repayment dates, the hope has always been that students will contribute back to the system once they start earning – but that is based on them getting jobs in this country. Should EU students return to their homeland once they finish studying at UK universities, the loan company relies entirely on their good will to start making the repayments. Are we starting to see the possible flaw in this ploy, yet?

To date, 9,000 foreign students are not coming forward with the repayments, leaving the UK taxpayer with an outstanding bill of £20M! Of that astounding figure, just £8,000 has been returned to the kitty after being pursued through the avenue of the courts.

The total debt of the 19,000 EU graduates to date stands at a staggering £47.4M. At current pay back rates, the UK economy could look forward to a return on their investment of almost £20k; however, investments usually cater for the return of the original stake as well as the premium to make it worth while.

I think it will be a cold day in hell before we see this payday returning a profit.

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New rules not enough protection, payday loan detractors say

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Payday loan industry detractors have been campaigning for stricter regulation on lenders, saying that new rules being implemented to protect consumers do not do enough.

The no credit check payday loans industry will soon be subject to a new code of conduct by way of the Finance and Leasing Association aimed at limiting the number of roll overs that can be granted to a borrower to no more than three as a response to high levels of pressure from consumer groups and the government. However, detractors say that since the FLA has only one payday lender within its membership, more must be done to protect consumers.

The new regulations covering short term loans are viewed as a step in the right direction by Labour MP Stella Creasy, who has campaigned for the introduction of a cap on interest rates charged by payday lenders, but believes that the limitation of roll overs does not go nearly far enough to make a difference. The MP pointed to payday loan regulations in the US, where limiting the number of roll overs leads to borrowers simply paying off the loan and then taking out another loan immediately, and that the only way a roll over limitation would work is if there was a time limit of around a month in between loans.

The Consumer Credit Counselling Service, a debt advice charity, said through a spokeswoman that it would rather see lenders no longer permitted from rolling over loans at all instead of an arbitrary limit. The spokeswoman also said that some payday lenders that operate both in the UK and abroad have agreed to similar regulations in countries such as Canada.

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FLA wants its payday lenders to change their tune

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In the wake of high levels of criticism from consumer groups and debt management companies for the actions of some payday loan providers, the Finance and Leasing Association wants its members who offer short term loans to customers to comply with new operational guidelines.

The industry body, which acts as a representative for around 50 firms that offer both motor finance and consumer credit such as instant cash loans, have said that payday lenders need to use more transparent methods when it comes to informing consumers with the cost of borrowing. The FLA also wants payday lenders to limit the number of roll overs it permits its customers to no more than three and to offer reminders to borrowers that these loans are not suitable long-term borrowing solutions.

The FLA’s consumer finance head, Fiona Hoyle, commented on the new guidelines, said that a credit assessment should be carried out properly each and every time a roll over is taken up by a borrower, and only after he or she has specifically requested one. This roll over cap is an essential part of the new FLA code, she added, as the changes are designed to institute more stringent standards for responsible lending.

The FLA is not the only industry body that is overhauling their operating standards. The Consumer Finance Association, an organisation which represents nearly 75 per cent of the entire payday lending marketplace, also recently reported that it was currently hard at work on enhancements to its code with the help of other trade associations and the Department for Business Innovation and Skills.

John Lamidey, the CFA’s chief executive, disagreed with introducing a roll over cap, as it would only act as a detriment to consumers by forcing them to look for financing from alternative lenders until reaching their limit. The new CFA code is set to launch later this year.

Mr Lamidey said that the roll over cap is being pushed by activists and politically-motivated critics, adding that while it may not be in the best interest of consumers to do so, the CFA may have no choice but to bow to the pressure being exerted upon it.

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Payday loan investment firms to be targeted

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The payday loan industry may need to weather yet another broadside as new plans were announced to target investment firms bankrolling providers of instant cash loans in an attempt to curb interest rates viewed as ‘sky-high,’ experts say.

Stella Creasy, Labour MP, recently remarked that she has plans to place pressure upon venture capitalists in order to cease providing finance to controversial providers of short term loans, as some of these companies have been accused of preying upon low income earners and other classes of borrowers with high debt, such as the military and students. Ms Creasy said that these cash loans carry APR interest rates as high as 4,000 per cent, though lenders say that the figure is misleading due to the short term nature of these loans, as they usually last only about a month and not a full year or more like traditional lending.

However, Ms Creasy insisted that the industry urgently needs to be reformed. The MP also announced plans to investigate the major pension funds in the UK in order to determine if there are any links with firms providing capital to payday lenders that provide loans in an irresponsible manner to the nation’s financially troubled.

Many major payday lenders have been slammed in the press recently for appearing to entice students to take out loans. Many of the online adverts of these companies encouraged students to avail themselves of a payday loan in order to finance a night out or using the cash to go on holiday, a move that has been swiftly condemned by honest payday lenders as irresponsible and predatory.

Payday loan providers to face tighter regulation soon?

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Payday loan providers may face tighter regulation soon, thanks to the new Financial Services Bill presented to Parliament recently, instant cash loans experts recently reported.

Payday lenders, which provide short term loans to those in need of emergency cash have become increasingly popular in the current economic landscape. Despite the relatively inexpensive nature of using a payday loan instead of an unauthorised overdraft – as payday lenders typically charge anywhere from £10-£30 per £100 borrowed – some consumer groups have been lobbying the government to regulate lenders more closely after taking issue with the high fees associated with missing the repayment deadline on a payday loan, and Shelter, the housing charity, recently revealed that its research indicates that one out of every seven households in the UK have resorted to either an unauthorised overdraft or a payday loan to pay their mortgage or their rent in the last 12 months.

The payday loan industry may soon be subject to new scrutiny under the Financial Conduct Authority, a new watchdog set to begin operations in 2013. The FCA will be given the authority to fine lenders who violate new regulatory practices such as detailed explanations as to how their customers will be treated, and they will also be required to present a business plan and be subject to more stringent checks before they can begin trading.

The FCA, which will be replacing the Financial Services Authority as the watchdog with oversight of the industry, will be better equipped to investigate lenders that may be engaging in behaviour that flouts regulations. Additionally, the FCA will also have the ability to issue bans on specific products from specific lenders that are not in the best interests of consumers.

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Welsh assembly members slam providers of short term loans

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Welsh assembly members have slammed providers of short term loans, accusing them of ‘sucking money’ from low income earning communities, payday loan experts recently reported.

Assembly members have urged the Welsh government to work hand in hand with voluntary groups and local councils in order to promote alternatives to payday advance services, citing that it has become too easy to take out payday lending from smart phones and over the internet. However, representatives from the payday lending industry disputed the fact that they were targeting poor households in Wales.

Payday lending is specifically designed to provide short-term debt relief for short periods of time, from a few days to a few weeks. However, a motion in the Senedd recently noted that payday lenders charge interest rates that are ‘extremely high,’ with Simon Thomas, Plaid Cymru AM, claiming he found a £400 loan over the internet with a 4,214 APR interest rate.

Payday lenders took issue with Mr Thomas’ ire, claiming that an annualised rate of return that the payday lending industry advertises is a legal requirement, even though using an APR on a loan that seldom lasts more than a month inflates the percentage to eye-watering levels. The actual cost of repayment, experts said, is misrepresented by high APRs.

The Consumer Finance Association’s John Lamidey took issue with the suggestion payday lenders were targeting the poor. Lenders are helping people, he said, with a focus on those with variable incomes due to the weak economy, rising inflation, and rampant pay freezes.

However, Mr Thomas countered, calling payday lenders a ‘plague’ operating without due care or regulation. He called for a cap on interest rates that he referred to as ‘excessive,’ though Mr Thomas did say that payday lenders did have a role to play in the Welsh economy.

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No credit check payday loans can avert disaster

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With the economy still performing poorly and the recession’s effects still being felt by many UK households, experts say that no credit check payday loans can avert disaster in the event of a financial emergency.

It’s hard enough to keep the family car filled with petrol and the dining room table laden with food as it is in the current economic landscape. Things get even harder if you’ve got a leaky roof or if that car needs to suddenly be taken down to the local garage for repair, but when it comes to dealing with an unexpected expense, taking out a payday loan can spell the difference between survival and disaster.

You could pay for the sudden expense just fine, you tell yourself, if only you could get your next pay cheque a few weeks early. This is where payday advance firms can come to the rescue, providing you the extra cash you need for a modest fee, giving you the breathing room you so sorely need in order to keep your head above water.

All you need is a bank account and have a steady job, and the majority of providers will approve your loan in minutes, right over the internet. For those of us struggling with poor credit as a result of mistakes in the past or suffering from pay freezes as inflation continues to climb, many providers don’t even require you to pass a credit check, and these lenders offer you the added convenience of making an automatic direct debit repayment once the loan becomes due.

However, it’s important to avoid using a payday loan in the event that you are unsure if you can repay it in full when it becomes due. As these loans are designed to be repaid in as little as a few weeks, lenders discourage missing the deadline by charging customers who miss these deadlines rather hefty fees, so industry experts say be absolutely certain you will be able to repay the loan without encountering any more financial problems before taking one out.

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Financial Conduct Authority should have oversight on lenders?

by Payday Loans

The Financial Conduct Authority should have oversight on credit card providers and payday loan companies, in order to regulate them more tightly, consumer groups recently said.

The Office of Fair Trading is currently the regulator of consumer credit such as instant cash loans from payday lenders, while it is the responsibility of the Financial Services Authority to oversee other retail financial services. However, MPs are currently examining the division with plans to separate the FSA into a prudential regulator and a new entity to be known as the Financial Conduct Authority.

Both Citizens Advice and Which? have come out recently in their endorsement of the new regulatory agency, remarking that the interventionist approach the FCA plans to adopt and a single point of contact would be a better fit for customers of retail financial services. The FSA’s consumer panel is understood to join the two consumer groups in its recommendation.

The panel chairman, Adam Phillips, said that the FCA would have the ability to intervene in developing issues related to short term loans and other retail offerings, if the FCA is given the ability to regulate consumer financial concerns in an effective manner. There needs to be a single regulator examining the myriad conduct issues in the financial services sector, added Mr Phillips, and Citizens Advice chief, Gillian Guy, added that it was of the utmost importance that retail lenders, debt managers, brokers, and debt collectors are all under the aegis of one regulatory body.

MPs are understood to come to a decision regarding consumer credit in the coming weeks in preparation of the financial services reform bill. The new regulatory scheme could be ready for implementation by 2013, experts say.

The legal framework around unsecured credit regulation may also be changed by the government as well. The Consumer Credit Act, which has an exhaustive array of lender rules and consumer protections, is the impetus for OFT, while a different law would govern the FCA’s ability to oversee banking and mortgage lending services.

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Payday lenders feel the heat for offering cash to students

by Payday Loans

Some providers of short term loans have been singled out for criticism after offering cash to students in lieu of student loans backed by the Government, payday loan experts recently reported.

Consumer bodies, student groups, and debt charities have all come down hard on the payday advance providers who offer their services as an alternative, calling suggestions that payday lending should be part of the everyday financial planning of students ‘irresponsible.’ Others, such as National Union of Students welfare vice-president, Pete Mercer, have leveled accusations of ‘predatory marketing’ tactics against the lenders.

The furore began when one consumer expert used social networking site Twitter to spread the news, calling companies that offer these loans to students a ‘moral disgrace.’ Others re-tweeted the original post and commented on it, with some referring to practices of this nature both misleading and exploitative.

In the wake of the incident, one major payday lender removed any mentions of the offer from its website, remarking that the information that had caused sparked the media frenzy was several years out of date, which led to the misunderstanding. The lender remarked that it is not its policy to actively target students as prospective borrowers.

This particular lender is usually quite responsible in its lending adverts, the consumer expert that initially blew the whistle remarked. However, regardless of whether the information was out of date or not, the expert added that the lender had ‘overstepped the line’ by comparing its services to official Government-backed loans.

The lender said that students were only a very small percentage of the company’s customers, though it did add that adult students that have a steady job should not be excluded from popular credit options.

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Albemarle & Bond posts increased annual profits for 2011

by Payday Loans

One pawnbroker and provider of instant cash loans has reported annual profits for 2011 that grew by £1.3 million over last year’s figures, industry experts recently said.

Wakefield-based Albemarle & Bond’s gross 2011 profits came in at £31.5 million, demonstrating continued growth for UK pawnbrokers and other quick loans providers. A&B has experienced two straight decades of profit growth, according to its annual report.

A&B’s pledge book has increased by 21 per cent, and the core of the business remains pawnbroking, as it contributed 52 per cent to the gross profit for the group. Other areas of the pawnbroker’s business, such as the provision of payday loan and gold buying services, also showed gross profit increases as well.

Gold volumes purchased rose by 83 per cent in 2011, with A&B posting a 27 per cent profit increase in comparison to the £11.5 million gross gold buying figure in 2010. The pawnbroker’s other lending, such as its Speedloans and Payday Anyway scheme, saw a gross profit increase of 16 per cent as well, from 2010′s £7.4 million figure to 2011′s £8.6 million.

A smaller part of the pawnbroker’s overall growth profit came from its jewellery sales, which earned a total of £6.4 million, equal to 10 per cent of its annual profits. A&B made a total of £101.9 million in revenue last year, an increase of 24 per cent, while its operating profits rose to £21.7 million, a 5 per cent increase.

The company predicted strong demand for cash and short term loans in the coming year, with the expectation that its new shops will come out ahead of their initial forecasts.

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UK banks still robbing customers with unauthorised overdrafts

by Payday Loans

Banks in the UK are still robbing their customers blind with the charges on their unauthorised overdrafts, some of which can actually cost consumers more than taking out a payday loan, industry experts say.

There has been little headway made on reforming the banking fees, even after a five-year legal dispute and a Government clampdown on unfair practices. In fact, many consumers are still paying the eye watering charges from their banking providers, according to a newly published report from consumer advocates Which?

The report from the consumer group says that even though the Government has instituted regulations to put unfair bank charges at an end, consumers can still see hundreds of pounds in fees if they go into the red – and these fees are much more than it would cost to repay a payday advance from a non-traditional lender.

The charges are incredibly complex, the report says, making it difficult to compare different providers or work out to what the final costs would be. This differs from payday lenders, who will charge a flat rate of anywhere from £10 to £25 per £100 borrowed for taking out one of their quick loans.

Which? chief executive, Peter Vicary-Smith, stated that the reforms announced by the Government designed to reform the overdraft charges simply don’t go far enough to eliminate the issue, adding that banks charge such complex fees that not even a maths PhD student could decipher them easily. Banks such as Lloyds TSB charge £5 a day for overdrafts of £25 or less, with the fee rising to £10 for balances over £25, and then charge a £5 monthly fee in addition to the daily fees – and then individual fees of £10 for failed direct debits and standing orders or bounced cheques for transactions in excess of £10.

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Pawnbroking industry experiencing resurgence in UK

by Payday Loans

In a complete about-face from two decades ago, the pawnbroking industry in the UK has been experiencing a resurgence as more Brits are looking for quick loans from sources besides High Street.

Whether they’re across from a reinforced glass screen or a chic desk, or whether they’re borrowing as little as £5 to much more significant sums, individuals across the nation are taking out instant cash loans in return for leaving personal property behind to secure the loan. There are no black marks against you if you default, and no credit checks to prevent you from getting your cash – just money for pawned item, typically around 40 per cent of its total value, to be returned plus interest after a few months.

Pawnbrokers, much like payday loan providers, have been exhibiting massive growth figures over the past few years as the economy takes its wild ride from recession to recovery. Albemarle and Bond, Harvey and Thompson, and other pawnbroking groups are doing brisk business, with the former announcing 25 more shops will be opened in 2012 and the latter exhibiting year-on-year growth in the double digits.

There are more than 1,000 pawnbroking firms operating within the UK, a far cry from the less than 50 that were in operation in the 1970s. However, more than just the global economic downturn may be responsible for the sudden proliferation of pawnbrokers, as National Pawnbrokers Association chief executive Des Milligan states.

The NPA chief says that growth has been steady since the 1980s due to large investments made by major chains in ideally-located sites, with refurbishment efforts being taken to modernise them and make them welcoming.

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Credit unions expand, compete with payday loan providers

by Payday Loans

Due to newly-introduced regulatory changes, credit unions in the UK are set to expand and compete with payday loan providers and high street lenders alike, with some industry experts predicting that the quick loans provided by credit unions striking a balance between the two.

Prior to the enactment of these new rules, individuals looking for traditional lending in the UK were in a bind, especially if their credit rating was less than stellar. Many have availed themselves of no credit check payday loans to get the much-needed funds instead of resorting to expensive unauthorised overdrafts from their banks, as overdraft charges can sometimes easily outstrip the cost of a payday loan repayment.

Credit unions were always seen as an alternative to traditional lenders, but rules governing these not-for-profit co-operatives have barred them from opening their doors to larger customer bases. Now, they are no longer bound by regulations limiting their member base to a geographical locale or pulling their members from common organisations.

Credit unions were also seen as poor choices for Brits looking to grow their savings pots in the past because members only paid yearly dividends on any balances. However, this limitation has also been lifted, and credit unions can now compete with high street banks on an even playing field.

A spokesperson from the Association of British Credit Unions Limited, Matt Bland, remarked that the newly revised rules governing credit unions should allow them to expand both their product ranges and membership quite swiftly. Credit unions being able to pay interest instead of only a dividend will be key in this expansion, added Mr Bland, as this will allow them to offer mortgages, ISAs, and other related products.

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Medway councillor lobbies for money lending shop ban

by Payday Loans

One Medway councillor has been lobbying to stop the opening of new money lending shops in parts of the region as concerns about an increase of predatory offering of instant cash loans to the vulnerable.

Believing that these shops, which offer quick loans to customers, are targeting low income earners that are already struggling with debt, Councillor Vince Maple has called for local authorities to be granted more permissive powers in limiting or allowing the proliferation of these shops nearby, with the argument being put to the government if Medway Council agrees with Mr Maple.

However, the Consumer Finance Association, the organisation that represents several of these money lenders, has said time and again that people will not claw their way out of debt by increasing their borrowing. The Consumer Finance Association’s chief executive, John Lamidey, said that the majority of long-term debt was on bank overdrafts and credit cards.

Attempting to borrow your way out of trouble from a CFA-represented payday loan provider – or anyone else – is simply not going to work, Mr Lamidey said. He recommended that anyone with long-term debt problems to seek out their local Citizens Advice Bureau.

Medway CAB chief executive, Dan MacDonald, added that the Bureau needs to increase its efforts to educate people living within Medway. In order to break a generation of debt, CAB needs to be encouraging financial literacy education at a very young age in schools, Mr MacDonald said.

Payday loan proponents say that the best way to use this form of short-term lending is only in an emergency situation, and only when you know that you can afford to repay the loan without having to take out another one.

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Credit card spending falls, payday advance lending up

by Payday Loans

While credit card spending in the UK may be falling currently, new information shows that payday advance lending has increased.

Brits are trying to manage their debt better, according to Santander’s credit card division, with a four per cent less money being spent on credit over the past year. Large purchases are being made with cash, and consumers may be taking out short term loans from payday loan providers instead of racking up credit card debt, experts say.

Consumers are still using their cards for smaller purchases, says Santander, as transaction volume has gone up by one per cent even has the amount of money spent is on the decline. Bars, restaurants, and mail order companies have all shown increased purchases via credit, suggesting Brits are trying to keep their spirits high in the bleak economic landscape by treating themselves with smaller purchases.

Petrol station and utility bill spending on credit cards had also gone up, according to the industry data. However, clothing stores, supermarkets, airlines, hotels, and travel agents all reported credit card purchasing had fallen off over the past 12 years.

Callum Gibson, spokesperson for Santander, remarked that the financial services provider’s data supports the expectation that credit card spending for non-essential items, such as clothes and holidays, would experience cut backs during times of economic austerity, and that cash spending would increase. ATM network LINK also reported last month that cash withdrawals increased by 11 per cent early in December in comparison to 2010 figures, indicating more consumers paid cash in the run-up to Christmas than they did last year.

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SNP asks for government to curb payday loan interest rates

by Payday Loans

The Scottish National Party has urged the UK government to take steps to curb the interest rates some payday loan providers charge for their cash loans, industry experts recently reported.

The SNP has requested action to be taken on this issue, with Alyn Smith, MEP, remarking that low income earners could be left with serious financial difficulties due to the high cost of repayment on these instant cash loans. Mr Smith commented that there are some lenders who are charging in excess of 4,000 per cent APR interest rates on their loans, though industry experts say that using an annualised metric to calculate the cost of repayment on a small-scale loan with a much shorter term than a traditional one overinflates the figure to such eye-watering proportions.

The MEP said that the UK needs to follow the trail blazed by the lion’s share of US states and many European countries in limiting the interest these lenders are permitted to charge. Exhorting the Government to ‘get their act together,’ Mr Smith called for more strenuous regulations before additional numbers of Brits are brought to the brink of financial ruin.

Many lenders were targeting vulnerable and hard-hit Scots over the festive period, according to Mr Smith, as many were in need of some extra finance in order to make gift purchases and also make ends meet last month. However, the MEP said that these lenders do little to help and instead can result in leading people even further into debt, adding that additional regal restrictions clearly need to be put in place to ensure these interest rates, which he called ‘ludicrous,’ were curbed.

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Credit unions poised to compete with payday advance firms

by Payday Loans

Thanks to new powers granted to them by the Government, credit unions in the UK will soon begin to compete with payday advance firms for customers through a significant expansion of the services they are permitted to offer to people living in Wales, Scotland, and England.

Thanks to these newly granted powers, credit unions will begin moving into the territory traditionally held by more traditional lenders, by being able to begin paying interest on deposits instead of just dividends and extend membership to multiple groups of people regardless of where they reside or work. Credit unions are now also able to offer their services not just to individuals, but to community organisations and businesses as well.

These new changes were instituted in an effort to provide people and organisations in local communities better access to affordable and fair financial services, proponents of the new changes remarked. The expanded powers will also free up credit unions to compete more effectively with both High Street and payday loan providers by establishing a middle ground of sorts, which many hope will provide people with cash loans at lower interest rates.

Credit unions have not been able to offer these services due to restrictions placed upon them limiting their membership to certain commonalities, such as working for the same employer or living in the same geographical locale. However, these providers are no longer bound by these restrictions, which will lead to their services being extended to new groups of individuals and businesses with much more ease.

Another major change to the rules that credit unions had to abide by include paying only a retrospective dividend on savings instead of earned interest. However, now credit unions will be able to provide interest on savings deposits, meaning that members will have more options when it comes to financial service providers of savings accounts, while credit unions will also be able to boost the number of customers they have that are interested in a full-fledged savings account.

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Choose payday loans over costly overdraft facilities

by Payday Loans

If you find your current account constantly in overdraft, then you may want to consider using a payday loan the next time you need to make a payment, as many financial services providers are charging interest rates that make instant cash loans excellent and less costly alternatives.

Making use of your bank’s unauthorised overdraft facilities too regularly can become prohibitively expensive very quickly, especially since all too many banks charge eye watering interest rates. However, if you’re in need of cash in a hurry, don’t go into the red if you can help it – instead consider taking out a loan from a payday advance lender, as repayment will almost always be less expensive than paying the overdraft fees on your current account.

However, financial experts say that while taking out the occasional payday loan to get you out of a tight spot can be quite helpful, if you find yourself constantly going into the red, you may have deeper financial problems that need to be addressed. You may want to consider switching accounts to a provider with less harsh overdraft fees, such as Santander, who offers free overdrafts for the first year and then charges only 50p daily, capping at 10 days out of every month.

Other ways to save cash include looking for a new utility provider as well. Electricity prices are up by 10.8 per cent on average, and gas by 17.4 per cent in the wake of recent rises, and if you are on a fixed deal soon to expire or a standard tariff, you could see savings of as much as £360 annually by finding a better deal.

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Payday advance lenders give access to quick loans

by Payday Loans

When a financial emergency raises its ugly head and you don’t have enough money on hand to handle the sudden expense, payday advance lenders can supply you with the quick cash loans you need to get through your sudden problem and get on with your life.

Brits lead busy and complicated lives, especially given the current economic environment where if you haven’t experienced financial strife, you know someone personally who has. Even if you’re not having trouble making ends meet in a world where wage freezes and redundancies are forcing countless Brits to tighten their collective belts, an unforeseen cash emergency in between pay cheques can send you scrambling for a payday loan.

Save yourself the humiliation of trying to squeeze some funds from your tight-fisted High Street lender when it comes time to cope with a financial emergency and instead consider approaching a payday loan provider. The majority of these providers offer cash to those in need in as quickly as a few hours, and without the need for a credit check; as long as you have access to the internet and a bank account, there are a myriad of lenders ready and waiting to offer you the help you need in order to clear whatever sudden hurdle you may have encountered.

You can’t always be prepared for every eventuality; no matter how hard you try, sooner or later you’ll be faced with a situation where you may need to make a sudden expenditure that you simply cannot handle at the moment, as your next pay cheque may be weeks away. This makes turning to the convenience of a payday loan an alternative worth considering quite seriously.

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You can still get a payday loan during the holiday season

by Payday Loans

Brits who have overspent during the Christmas break might be pleased to learn that at least one payday loans broker is continuing to operate as normal throughout the holiday period.

Payday Power has been trading as normal and was even providing instant cash loans on Christmas Day. Furthermore, the company says that customers will still receive the same level of service on New Years Day as they would on any other day of the year.

The firm is one of the UK’s prime brokers for short term loans and can call on a vast pool of companies to help it make rapid lending decisions. This expansive list enables it to offer same day loans 24/7 every single day of the year.

At this time of year, people have fewer opportunities to contact their bank if they have financial difficulties as the banks are closed for public holidays.

One of Payday Power’s directors explained that nobody wants to be out in the cold when it comes to accessing finance. Payday loans are supposed to be a convenient way to access finance regardless of bank holidays.

He went on to say that the festive season is usually the busiest time for applications and the company doesn’t want to let customers down. By working with a diverse range of quick loans firms, Payday Power can provide a comprehensive service throughout the year.

Whilst stressing that the company is committed to responsible lending, he did say that Payday Power wants to help those people who are in most need of financial help at this time of year.

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London councillor investigates payday loan companies

by Payday Loans

Labour MP Stella Creasey had been calling on the government to take action over payday loan companies by capping the interest rates they charge.

Supporters of her call say that borrowers can get themselves into a cycle of debt by relying on high interest short term loans.

Whilst not ruling out a cap completely, David Cameron would prefer to see lenders adhere to a voluntary code of practice on the basis that vulnerable people might be driven to less scrupulous loan sharks if they were denied access to small loans from payday loan providers.

Rowenna Davis, a London councillor, decided to investigate payday loans by posing as a customer and visiting lenders in South London. She explained that she needed to borrow money to pay her rent, but she was concerned about paying it back.

In one loan shop, Ms Davis was told not to worry and she could get an instant cash loan at a rate of 25% in 15 minutes. What she wasn’t told was that if she defaulted on the payment the interest charges would work out at 1,410.3% APR.

Ms Davis then went on to tell the shop cashier that she was worried she may be out of a job next year to which she was told that loans could also be made available to people on benefits.

Consumer Focus, a rights group, says around 66% of people who apply for a payday advance have a household income lower than £25,000, and the average loan is £300. For people like this, payday loans are often the only solution when they need quick cash.

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Instant cash loans growing in popularity for emergencies

by Payday Loans

Brits encountering financial emergencies are turning to instant cash loans in increasing numbers, and many have been able to keep themselves afloat thanks to the availability of funds from a payday loan providers whilst caught between pay cheques.

You can avoid the pain and humiliation that can accompany not having enough cash in an emergency situation, such as unforeseen expenses due to any number of different reasons, by availing yourself of a provider of quick loans. This particular type of lending has been especially designed to get you funds as swiftly as possible, as many providers offer cash in your bank account the same day as your application.

The requirements for such a loan are also designed to make the finance available for the widest range of people in the UK, as there are few lenders that will run a credit check before making a decision regarding an applicant. In fact, as long as you’re at least 18 years of age, you can demonstrate some form of steady income, and you have a bank account, the lion’s share of payday lenders will approve your loan.

With the current economic uncertainty in the UK, it can be exceedingly hard to keep some emergency cash on hand in the event of a costly incident. Most Brits have had to stretch their pay cheques thinner and thinner in the face of jobs losses and wage freezes, resulting in dwindling savings rates.

This means that if a consumer would normally be able to pay for an unforeseen expense just a few days after their last pay cheque, but cannot do so because their next one is instead weeks away, they can pay a small fee for the service of getting a payday advance, which is due upon repayment of the loan.

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Labour MP calls for more payday loan regulation

by Payday Loans

Labour MP Stella Creasy has been campaigning long and hard to more strongly regulate the payday loan industry in the face of new research results that indicate at least 2 million Brits possibly using instant cash loans.

The research survey polled more than 2,000 people in the UK, finding that only 3 per cent of respondents had availed themselves of the types of short term loans provided by payday lenders. However, with cash shortfalls expected to grow over the next six months, the research findings suggest that twice that figure could end up looking for quick loans to help make ends meet.

The report found that many households in he UK have been experiencing increased financial hardship, as benefit cuts and tax increases have impacted their ability to meet the costs of paying mortgages, credit cards, and bank loans. Consumer Focus produced a report last year that went into even more detail, revealing how much convenience the payday loan industry brings to consumers, with nearly instantaneous fund transfers and offering the ability to customers to avoid traditional high street lenders or having to resort to borrowing from friends and family.

The Consumer Focus report also found that the use of payday loan providers in the US, which is where the industry first grew to prominence before moving to the UK, actually helped to prevent financial crisis in some cases and also managed credit flows in the short term. Meanwhile, two US states that instituted rate caps on payday lenders experienced higher bankruptcies and more debt problem complaints, the report also found.

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Do payday loan companies truly ‘not believe in Christmas?’

by Payday Loans

Payday loan companies have faced a new salvo fired by detractors, with claims that the industry is decidedly Grinch-like this festive season and that lenders ‘don’t believe in Christmas.’

Small loans provided by payday lenders have been criticised before, as many charge an annualised percentage rate of nearly 4,000 per cent in interest to its borrowers over the course of the loan. However, these short term loans, which are only advertised with an APR because lenders are required to by law, are not nearly as expensive to repay as the APR leads consumers to believe, as the APR is an inaccurate way of representing the real cost of repayment on a loan with a term of just a month instead of a year.

Despite lenders constantly pointing out the fallacy of using an APR to evaluate a payday loan, detractors have been slamming the industry as being ‘extortionate,’ lobbying hard to make such ‘outrageously high’ interest rates a thing of the past. The heat has been turned up in the run up to the festive season, with the number of Brits relying on payday loan companies to make ends meet and also do all their gift shopping in time for Christmas rising rapidly due to the stagnant economy and increasing unemployment.

The payday loan market has exploded recently, with volume undergoing a 300 per cent increase since 2007. Brits now avail themselves of in excess of £1.7 billion in loans from the industry on an annual basis, according to some market estimates.

The Newcastle Citizens’ Advice Bureau recently reported that out of the 15,000 individuals that contact it every year, around one out of three have borrowed from a payday lender.

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OFT takes action against providers of cash loans

by Payday Loans

The Office of Fair Trading has decided to take action against many providers of cash loans after the volume of complaints made against these payday loan companies doubled over the course of 12 months, industry insiders recently reported.

While the OFT has not named the providers of short term loans involved in the dispute, it did say that concerns had been raised that companies were not checking if their customers had the financial ability to repay the loans promptly. The watchdog organisation also feared that these lenders were not giving customers a proper explanation of the terms of these loans, especially in light of the often high fees for neglecting to repay the loans in a timely manner.

Those lenders fund to be guilty of misconduct could see their credit licenses revoked or be given no choice but to alter their lending practices. The OFT has now widened its investigation in the run up to the festive season, and will be examining an additional 50 firms and their online advertising efforts.

The regulator received more than 1,500 complaints regarding these controversial firms from January of 2011, which was a marked increase over the 700 it received over the entirety of 2010. It was particularly surprised that credit card companies were complained about much less than payday lenders, even though the former is used much more regularly and in higher volumes by the general public.

Payday lenders have been the target of large levels of criticism as of late from both political figures and consumer interest groups. The interest rates on these loans are considered to be high, with APR interest rates of around 3,000 per cent in some cases.

However, industry experts say that the APR is inaccurate in regards to calculating the real cost of repaying a payday loan. This is because APRs are used to calculate an annualised interest rate for more traditional loans with repayment terms of one year or more – and payday lenders require repayment in much shorter terms, such as anywhere from a few weeks to a maximum of 45 days.

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Complaints against payday advance lenders on the rise

by daviddemar

The number of complaints made against payday advance lenders have risen by more than double over the past 12 months, as controversy over providers of short term loans mounted due to alleged aggressive marketing practices and high repayment costs.

The Office of Fair Trading recently released figures, revealing that the number of grievances filed by customers of payday loan companies increased to 1,535, up from last year’s figures of 700. The regulator also reported that credit card users made less complaints to the OFT than payday loan borrowers, even though the instant cash loans industry has fewer borrowers than the credit card sector.

The Financial Ombudsman Service also reported a sharp increase in the number of complaints it processed regarding payday loans from January of 2011, indicating that complaints figures have risen by 72 per cent in comparison with the same period of time last year. Consumer groups and politicians alike have been queueing up to take shots at the payday lender industry, despite their growing popularity with lower income earners who have had to turn to these lenders in the face of rough economic waters squeezing household budgets.

According to a Consumer Focus research study conducted in 2010, there were 1.2 million payday advance borrowers in the UK in 2009, up from the 2006′s figure of 300,000 borrowers. Some recent estimates have put 2011 levels at as high as 4 million borrowers.

While the OFT has faced criticism in the past for being too lenient with payday loan companies, it has since announced it will be more closely examining lender practices, with plans to implement investigations and enforcement as well.

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Is the Government out of touch on payday loan providers?

by Payday Loans

The Government found itself besieged lately by accusations leveled that it was out of touch in regards to the payday loan industry when it was found that it was using official figures that were out of date by two years.

The number of businesses offering instant cash loans has risen at a substantial rate over the past 12 months, prompting the Government to undertake a review of the industry. However, a Department for Business report is not due until the summer of 2012, leaving the only data available to the Government a 2009 study conducted by the sector watchdog the Office of Fair Trading.

Debt advocacy organisation the Centre for Responsible Credit’s chief executive, Damon Gibbons, called it ‘woeful’ that the Government was using 24 month old information in order to make decisions regarding providers of short term loans. Mr Gibbons called it a ‘matter of urgency’ to both consider a national database for payday lenders and to also improve the information regarding the market size and its growth figures.

The United States, where payday loan companies rose to prominence, has been careful to monitor their industry in order to prevent American low income earners from being drawn into unmanageable debt levels, the chief executive said. Now, with the UK now becoming a hotbed of payday lender activity, Mr Gibbons called for similar regulations placed on the British counterpart of the American import.

An American database used for loan registration had not placed any limitations on the US market, said the chief executive. In fact, the Florida-based database has actually aided to reduce debtor defaults, Mr Gibbons added.

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Eye watering interest rates misleading, payday lenders say

by Payday Loans

Payday advance lenders say that, even though critics may decry the services they provide for low income earners struggling to keep food on the table and the utilities paid, eye watering interest rates on short term loans are misleading.

The High Street may not be looking forward to the festive season, as retailers are expecting lacklustre levels of business with so many Brits feeling the financial squeeze, yet the payday loan industry is one that is not in any danger of slipping into the red this Christmas. One provider of online loans, Ferratum, recently remarked that in excess of 2 million Brits have already availed themselves of their services, according to the UK marketing and sales manager for the company, Ian Porter.

Mr Porter said that Ferratum has already seen a substantial increase in demand for its services. This is especially telling because there are still several weeks until Christmas Day, and since the majority of Brits have already gotten paid this month, the need for a bit of extra cash to get them through the festive season will only grow even larger over time.

Short term payday lending are primarily designed for just this purpose – tiding over borrowers until their next pay date, with providers offering the funds with a minimum of hassle and time. Designed to be paid back within around a month on average, these loans come with APR interest rates that can seem enormously high, from anywhere between 2,500 per cent to 5,000 per cent, but using an APR to advertise lending rates – something all lenders in the UK are required to be law – are misleading due to the length of these loans, which are much shorter than a traditional loan from a High Street provider.

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Payday advance lenders put on notice of impending clampdown

by Payday Loans

Payday advance lenders in the UK have been put on notice of an impending clampdown on a proportion of its more controversial lending practices, industry experts recently reported.

Consumer affairs minister Ed Davey has said he would like to limit the ability of payday loan providers to debit their customers bank accounts directly. The Liberal Democrat has also said he would like to see credit unions used for short term loans instead of payday loans.

In a recent interview, Mr Davey had strong words for critics who claim that the regulatory regime of the UK was too soft on payday lenders, which have been experiencing a recent surge in activity – especially from low income earners. Stating that the Government was ‘hyperactive’ on the issue, the consumer affairs minister was quick to claim that a problem exists, one which he blamed on the Labour government, calling the legacy a ‘disastrous’ one.

However, the Liberal Democrat’s focus is less on seeking fresh legislation and more on working hand-in-hand with the industry to institute improvements to its standard practices. Mr Davey commented that any policy responses made in haste could backfire and push even more Brits into suffering the tender ministrations of illegal loan sharking operations.

Remarking that the importance of getting things right was high, the consumer affairs minister admitted that Brits need this access to cash. He said that it needs to be kept in mind that a large number of these payday lenders do not operate in an exploitative manner, and actually offer very good services to their customers.

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Mid-month sudden expenditures got you down? Don’t panic!

by Payday Loans

When it comes to sudden expenditures right in the middle of the month, when it seems like your next payday is farther away than peace in the Middle East, don’t panic: look into taking out a payday loan, as this may solve your problems.

There’s any number of situations that can arise in which you run out of cash in between paydays. Imagine that your car ends up breaking down and needs expensive repairs – what do you do when you’re in between pay cheques, and you rely on your car to get to and from work?

It’s too late to kick yourself for not taking breakdown cover on your insurance. Instead, consider taking out one of many instant cash loans that are available to you from payday lenders in the UK, as they can provide you with the extra cash you need now that will allow you to get back on with your life as soon as possible.

The way these short term loans work is quite simple: for a flat fee, which is due upon repayment of the loan, the lender offers you anywhere between £100 and £1000 for as little as a week or as long as a month. This gives you the ability to pay for that financial emergency now with the assurance that you can simply pay back the loan, plus the fee, once your next pay cheque comes in – and you can just get back to your day to day business without a worry in the world.

Industry experts say that payday loan companies can provide a valuable service to cash-strapped Brits, but they do warn consumers to make sure they can afford to repay the loan on time and in full. The penalties for failing to repay a payday loan can add up very quickly over a very short period of time, so experts insist that you shouldn’t borrow more than you know you can repay on your next payday.

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MPs call for regulation, single out payday advance firms

by Payday Loans

MPs calling for more regulation of high-cost credit providers and debt management firms have singled out payday advance companies in a bit to improve the level of consumer protection present, no credit check loans experts recently reported.

In addition to payday loan providers, the bailiff industry, the Money Advice Service, and commercial debt advice firms all came under fire during a recent Commons debate regarding where policy actions should be concentrated upon in order to increase consumer protections. Debt advice was particularly targeted as one of the areas where a closer look was needed.

Stockton North Labour MP, Alex Cunningham, commented that the Money Advice Service was apparently a new group attempting to find its way in the world, yet a clarification of its role was needed quite desperately. Commercial debt management companies were also critisised by Charham and Aylesfort Conservative MP, Tracey Crouch, claiming that they routinely put customer welfare second.

Ms Crouch added that while additional regulation is not a topic she welcomes typically, it may be all too necessary to reining in rogue debt management companies. A clear bias currently exists towards strong-arming customers into plans that will allow the debt management firm to shift the focus from steadily paying down their debts over time to instead choosing a plan which will yield the most in fees for the company, the Conservative MP also added.

With these plans obviously not within the best interests of consumers, oftentimes they will fail to accomplish their stated goals because the monthly payments – much like the level of debt – is simply too high.

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High Street decry payday loans, yet charge even more at times

by Payday Loans

Many High Street lenders have been highly critical of payday loan companies due to their ‘exorbitantly high’ APR interest rates on instant cash loans, yet new research reveals that these same banks charge even higher rates to their customers who become overdrawn.

Providers of no credit check loans are required by law to advertise the APR on their loans, which can be quite high – as much as 5,000 per cent in some instances. However, this is nothing in comparison to the eye-watering 819,100 per cent APR on an unauthorised overdraft of £100 from Spain-based banking giant Santander for four short weeks – leading the customer to repay a total sum of £200.

The revelation has sent traditional lenders scrambling for cover, and in doing so have implicitly endorsed payday loans at the same time. British Banking Association spokesman, Eric Leenders, commented that calculating the cost of an unauthorised overdraft by APR was a ‘mathematical manipulation,’ which is exactly what payday lenders say when confronted with the question as to why their own APR loans are so high.

Traditional lenders have been pointing the finger at payday lenders for far too long, calling the APRs on instant cash loans ‘massive.’ The payday loan industry has shot back, remarking that the APR is a poor way to evaluate the cost of a payday loan, as annualising a payday loan, which is designed to be repaid back within a few days to a month, charges a set fee per £100 borrowed by a customer.

Now, High Street wants to have their cake and eat it too, claiming that it’s inappropriate to translate overdraft fees into an APR rubric because represent borrowing on an overdraft facility. The irony seems to be lost on them.

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Industry body president warns Brits from racking up debt

by Payday Loans

One insolvency industry body president recently issued a warning to Brits about racking up debt early next year as they try to pay off their Christmas shopping, payday loan experts recently reported.

Industry body R3′s president, Frances Coulson, leveled her criticisms at the payday advance industry, warning off UK consumers based on her organisation’s recent research revealing that one out of every three Brits will take around a month to clear debt brought about by their spending this festive season. However, things may not be as dire as Ms Coulson may be intimating, as last year’s figures saw that the number of consumers taking 30 days to pay off debt incurred over Christmas was was one in two.

The industry body president said that despite the findings, there are still large numbers of Brits who will find it a struggle to afford their Christmas shopping, resulting in having to turn to credit cards and short term loans instead. She cautioned consumers to be wary of the higher rates of interest that can accompany these sources of credit, as this could leave them encumbered with more debt than they can repay in a reasonable amount of time.

R3’s research findings indicate that 13 per cent of respondents reported feeling that they would not have the ability to pay their bills by the end of the month of December. However, in the capital, this figure rose three percentage points to 16 per cent.

The Debt Support Trust’s Stuart Carmichael also commented, reportedly advising UK consumers to not resort to payday advance companies. However, many of these lenders are actually less expensive than having to rely on unauthorised overdrafts, leading a large number of industry experts to actually recommend them if those in need have little to no other options – especially as High Street banks continue to marginalise middle income Brits.

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Instant Cash Loans Ltd aims to open shop in London

by Payday Loans

Instant Cash Loans Ltd, a company which owns and operates more than 400 payday loan shops, aims to open another location in London , on Tower Bridge Road.

Southwark Council received the planning application from the cash loans provider trading as The Money Shop for turning 82 Tower Bridge Road, the site of a former amusement arcade, into a new storefront where it will also offer foreign currency exchange, money transfer, and cheque-cashing services. The Money Shop’s application says that it has the expectation that its new site, if approved, will most likely generate around 100 transactions on any given day, with Fridays to most likely come in at around 250 transactions, with the last Friday of every month possibly attracting in excess of 300 customers.

Jackie Doyle-Price, Conservative MP for Thurrock, mentioned the Money Shop recently in the House of Commons, telling MPs that the company offers loans with a charge of less than £10 for every £100 borrowed, calling the deal a ‘reasonable’ one provided borrowers can pay back the cash on time, as exceeding the time limit can result in spiraling costs. However, other MPs, such as those Labour representatives for Lambeth and Southwark, have been campaigning much more strongly to placing more limitation on payday loan providers, as Southwark Council leader, Cllr Peter John, called lending of that kind both financially and socially irresponsible, referring to it as a ‘scourge’ on the community.

Cllr John also said that Southwark streets are altogether too thick with these payday loan providers, calling for alternatives to these loans be made more readily available to the council’s residents. However, Val Shawcross, London Assembly member, pointed out that alternatives are thin on the ground, especially as High Street banks have traditionally left lower and middle income Brits out in the cold when it comes to access to affordable credit.

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Why didn’t Government cap payday loan interest rates?

by Payday Loans

UK pressure groups are angry that the Government failed to take action against legal loan sharks last week.

The Government has been reviewing consumer credit and last week it announced a voluntary deal whereby High Street stores would no longer offer discounts to entice customers to take out a store card. However, the government did not go as far as capping the interest rate charged on these cards, which can be as much as 30%, or taking action against payday loan companies that charge ridiculous rates for small loans.

The Government did acknowledge that concern was rising over instant cash loans and said a study into the effects of capping the interest rates on short-term loans will be published next summer.

Data from the Debt Advice Foundation suggests that 41% of people caught up in the debt trap have taken out salary advance loans, and many of them claim they were not given fully informed about the full cost of the loan.

MPs and pressure groups want the payday loan industry to be regulated and doubts have already been raised as to whether some lenders operate completely within the law.

One major concern is whether customers of no credit check payday loans companies are allowed the legal cooling-off period of 14 days to cancel the loan.

An increasing number of people are expected to turn to payday loans to finance their festive celebrations. If you are one of them, make sure you can afford to repay the loan within the requisite time frame, or else you could get caught in the debt trap.

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Consumer Focus speaks out on payday loans

by Payday Loans

One consumer credit watchdog has recently commented on the role payday loan providers could possibly play in regards to the debt accrued by lower income families in the UK in its response to new consumer credit improvement measures instituted by the Department for Business, Innovation and Skills.

Consumer Focus remarked that they had concerns in regards to the debt collection, sales, and marketing practices of a small number of companies providing instant cash loans in the UK. The watchdog expressed a desire to see more safeguards sensibly put in place in order to prevent regular borrowers of quick loans from spiraling down into debt.

Consumer Focus chief executive, Mike O’Connor, made several suggestions regarding some lender practices, such as limiting the number of rolled-over loans, or even loans altogether, to no more than five every year. Mr O’Connor also called for more traditional lenders such as banks and business societies to extend short-term credit to customers in need of cash, adopting more transparency in their charges and overdraft fees.

However, the consumer watchdog agreed with the government’s new proposal to prevent retailers from offering a discount on purchases made with store cards at the time of taking one out, calling it a step in the right direction. Consumers will undoubtedly consider their options much more carefully before resorting to store cards to do their shopping, as this type of credit can be extremely expensivee, said Mr O’Connor.

Consumer Focus did express its disappointment that the new measures as proposed by the government are not compulsory, and that there were no current plans to add new laws to the books to protect British consumers from exorbitant bank charges.

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Will 0% payday loan deal lead borrowers into more debt?

by Payday Loans

Both the Money Advice Trust and Citizens advice are warning consumers that an introductory 0% payday loan deal could lead them into an out of control spiral of debts.

Debt counselling charities advise struggling borrowers to steer well clear of the interest free, short-term loans being offered by InstantLoansDirect.com. The payday advances are interest free for the first eight days and then attract a fee of 50p per £100 for every day the loan is outstanding.

Joanna Elson, the Money Advice Trust’s chief executive, said this type of offer could be very dangerous for people who are struggling to get their finances under control. If borrowers end up in a situation where they are unable to meet their repayments, they are faced with astronomical interest charges.

The company could actually lose money if everybody repaid their loan within the eight-day period. However, the chances of that happening are extremely remote. She went on to say that robbing Peter to pay Paul is not the best way to manage debts.

Moira Haynes from the Citizen Advice Bureau said the charity had experienced a fourfold increase in clients taking out payday loans over the last two years, and many of them already had financial problems before taking out the loans.

One of the major concerns is that these loans are so easy to obtain, she added. Even unemployed people and those on very low incomes are managing to get no credit check loans.

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CFA dispels rumours surrounding short term loans

by Payday Loans

While more and more consumers are finding themselves in need of quick loans, the Consumer Finance Association has come forward in order to dispel the rumours swirling about in regards to the short term loans sector.

John Lamidey, chief executive of the CFA, said that he speaks to politicians, government officials, money advice agencies, and customers regularly in his role as chief executive for the payday loan industry trade association. Too much confusion is plaguing all of these parties in regards to the types of lending CFA members are offering, Mr Lamidey continued, adding that these short term loans can prove quite useful in meeting immediate opportunities or needs and avoiding debt in the long term, provided repayment is carried out promptly and in full.

In order to put these rumours to rest, the CFA has published a list of the most common misconceptions regarding the payday lending sector, including several facts pertinent to the issues. One such commonly misunderstood subject is that of how the high Annual Percentage Rate, or APR, of a payday loan does not equate to a loan that is expensive to repay.

It is a regulatory requirement to list an APR on a payday loan, even though such a measurement is wildly inaccurate for the industry because the APR is an annualised rate more suitable for long-term loans, yet payday lenders typically require repayment in full in 30 days on average. The interest rate does not indicate the cost of repayment on the loan, with many industry experts calling the high APR of a payday loan as ‘fundamentally misleading,’ as it would be the same as referring to the annual cost of car hire to be £15,000 a year, yet the daily cost of a rental car would only be £40.

Another fact that many consumers do not know is that unauthorised bank overdrafts are actually much more expensive to pay back on average than if the same amount of cash were borrowed from a payday lender. In one example, it would cost around £250 to repay a £200 payday loan after 30 days have elapsed (with a 1,413.1 per cent APR) – yet it could cost as much as £350 to repay the same amount over the same period of time on an unauthorised bank overdraft- and the APR on such a repayment would be 90,888.9 per cent.

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Pressure groups angered, government refuses to limit lenders

by Payday Loans

Pressure groups were recently angered by the government’s refusal to limit payday loan providers and other high-interest lenders, short term loans specialists report.

The government refused to institute interest rate caps on many forms of consumer credit as part of its recent review of the matter, leaving doorstop lenders and providers of no credit check loans alone, which has incensed pressure groups who wished to limit these firms from charging interest rates they refer to as ‘exorbitant.’ However, the government did announce a voluntary new programme that would encourage High Street shops from tempting customers to sign up for their store cards by offering discounts.

Micro-loan companies have been under fire from pressure groups for their interest rates. These pressure groups cry foul at the APR on these loans, which may appear to be huge at first blush, as they range from 2,500 to 5,700 per cent, yet neglect to point out that Annual Percentage Rate calculations are optimised for long-term loans of one year or greater, and are completely inappropriate for shorter term payday lenders.

Why then do payday advance firms open themselves up to criticisms by advertising such massive APRs on their loans? The problem is that payday loan firms, which are a recent import from the US, are bound by law to reveal their rates as calculated by APR, even though doing so results in massively inflated figures that industry experts say don’t reflect the real cost of loan repayment.

These older regulations simply do not take into account how inappropriate using an APR is to compare a shorter term loan to a more traditional one, as these loans simply did not exist in the UK a few short years ago.

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Are free cash loans targeting families with financial troubles?

by daviddemar

One debt charity recently stated that free cash loans could be targeting families with financial troubles by luring them into paying massive penalties for late repayments, industry experts report.

Consumer Credit Counselling Service spokesperson, Una Farrell, had nothing but bad things to say about one payday loan company that has begun to offer short term loans with 0 per cent interest rates, even as the lender’s founder states that the move is designed to be a help, not a hindrance.

Founder of provider InstantLoansDirect.com, Giles Coutts, remarked that he hopes his firm can aid consumers during a bleak financial time. However, Ms Farrell instead accused the provider of preying on the put-upon, with the penalty rates for missing a repayment on the loan simply too high in her opinion.

The deal, which will provide as much as £300 to a household for period of time as long as eight days without interest, as long as the borrower can prove they make at least £750 every month, will be available to the public through March. This could be a real boon for those hard-pressed by the current economic situation gripping the UK, and with the added bonus of zero per cent interest, industry experts predict the loans will prove to be quite popular.

However, Ms Farrell took issue with the penalty repayment scheme attached to the loans, with charges of 50p on every £100 borrowed will stack up every day until the loan is repaid. The consumer credit expert says that this equates to a 448.3 APR, but proponents of the lending scheme have pointed out that the maximum penalty fee of 150p a day is hardly going to send anyone to the poorhouse if you take an extra day or two to pay back the loan.

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Get the truth about no credit check loans

by Payday Loans

While much has been said about the payday loan in the news media lately regarding the high APR interest rates a typical loan carries, interested prospective borrowers should learn the truth about these no credit check loans before making a decision in one direction or another.

Instant cash loans are undoubtedly one of the fastest and easiest ways currently available to get a quick infusion of emergency cash to help pay the costs of unforeseen incidents that can crop up from time to time, leading to the popularity of such loans growing and threatening to eclipse more traditional lending. Unlike a personal loan from a high street lender, a payday loan can be in your bank account nearly instantly, as long as you provide the lender with your personal and employment, debit card, and bank details, without ever needing to run a credit check.

These loans run for short terms – typically a span of thirty days – and can range anywhere from as little as £50 to as much as £750, plus interest of course. The interest rates on these loans often feature a very high APR, something that has garnered its fair share of negative press, but the rate is misleading – all lenders are required by law to quote an APR rate, but the rates are calculated on the standard of 12 months, not a simple thirty days, which makes the cost of a payday loan look astronomical in comparison to a longer-term loan.

Industry experts say to not just look at an APR on a loan, but examine how much you will actually need to pay in interest. While you may only pay £10 or £15 in interest on a 10 day loan, for example, the real cost might be quite manageable, but the APR may seem eye-watering.

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Demand for short term loans predicted to blossom for Christmas

by Payday Loans

The demand for short term loans just shortly before and directly after the Christmas season this year is predicted to grow rapidly by the hundreds of thousands, with payday loan companies gearing up to provide the best value for their customers, experts say.

However, a number of financial advisors have begun to warn against taking out instant cash loans, since many major retailers have been predicting that household finances will be stretched to the breaking point this coming festive season. Around one out of every three of Morrisons’ customers have little to no disposable income remaining by the end of the month, the supermarket chain said, as one example of how hard-pressed British families have become due to the increases in the cost of living.

This has paved the way for payday loan companies to provide much-needed services to these households, allowing families to take out short term loans in order to cover these monthly expenses until they have the money in their bank account from their next pay cheque. More than two million households in the UK may already be taking out these quick loans, according to leading lender Ferratum, who just opened its doors in the UK this past July.

Sales and marketing manager for Ferratum’s UK division, Ian Porter, remarked that short term loans may very well be the quickest growing sector within the financial services industry, citing the flexibility of these loans as one of their key selling points. Customers have more and more decided to turn away from traditional lenders and their l0ng-term loans, many of which will invariably require a credit check – and in the current economic landscape, that fact puts longer-term loans out of reach for many.

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Recession takes its toll, more turn to payday advance firms

by Payday Loans

With the recession continuing to take its toll on UK households, more have had to turn to payday advance providers in order to make ends meet and continue to pay the bills.

In addition to turning to payday loan companies, Brits have been resorting to any and all options they can find in order to get the extra cash they need. Many have turned to pawnbrokers, and the types of items being pawned or sold is growing wide and varied.

People have been selling and pawning all sorts of bizarre paraphernalia to secure quick loans or extra cash in a pinch. An online lender recently reported a wide array of items, such as a Henry Moore sculpture, Beatles memorabilia, an 18th century bible, two Ivor Novello music awards, and even a tank.

The Ivor Novello awards netted the borrower £2,500, while the tank went for around £10,000, according to the lender, while the owner of the Henry Moore sculpture took out a £50,000 loan with the piece of art as collateral, and the Beatles meorabilia was valued at more than £32,000 – yet the owner of the 18th century bible was found to be worth only £200.

Desperate times, it seems, truly calls for desperate measures, as the number of bizarre and fantastic items being used to secure loans has gone up by a sizable margin. One industry insider commented, stating that it is obvious that Brits are being hammered by the stormy economic climate, and have found innovative ways to raise the cash to aid them in paying for emergency situations requiring a sudden expenditure of cash.

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‘Don’t call us a pawnbroker,’ payday loan company says

by Payday Loans

The quickest way to insult one worldwide payday loan company is to call them a pawnbroker, according to the chief executive of their UK arm.

Cash Converters UK chief, David Patrick, is insistent that the company has grown to be a full-fledged retail business, offering not only instant cash loans and cheque-cashing but also the opportunity for customers to unburden themselves of used or unwanted goods for cash. Mr Patrick says the success of Cash Converters is no surprise as a result of not only the sickly economy but also due to the fact that many of his customers have been abandoned by traditional lenders.

From its humble beginnings in Perth, Australia nearly 30 years ago to a global business with more than 600 locations across the globe, the company is a place where you can get quick loans or sell off your unwanted items if you’re looking for cash in a hurry, said the UK chief executive. Mr Patrick also said that the stores offer excellent alternatives if customers cannot afford to purchase brand new items, as well.

Now, trading as Cash Converters International on the London Stock Exchange, the company has reported £26 million in pre-tax profits, a new record, thanks to its aggressive expansion policy of franchise sales. Total revenues for the 12 months from the end of June for Cash Converters up came in at £120 million.

The 55 year old UK chief executive, who took reigns a little over two years ago, is still defensive, despite all the success. He is insistent that Cash Converters needs to be viewed as the largest retailer of second-hand goods in the world, and not just a simple pawnbroker.

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Payday loan company endorses call for cap on cost of borrowing

by Payday Loans

Payday loan companies are often accused of irresponsible lending, but that is not true of all of them.

Last week, Gary Miller-Cheevers, the CEO of speedeloans.com, back the Labour MP Stella Creasey’s call for the government to cap the cost of borrowing. Ms Creasey wants to see a cap on the interest rates payday advance firms are allowed to charge on their loans before the Christmas rush.

Mr Miller-Cheevers said that instant cash loans are primarily there to cover short-term needs and emergencies. 31% of people in the UK do not accessible savings and if they suddenly receive an unexpected bill, a payday loan can help them out until they receive their next salary.

However, some lenders do not act responsibly and they charge exorbitant amounts to people who borrow small amounts of money. The theory behind a cap sounds reasonable and speedeloans.com endorses that, but should the government cap the cost of credit or the APR?

The expresses the annual interest and is therefore totally inappropriate for a loan lasting only days. The average term for a speedeloans.com cash advance is 19 days and works out as a 1% daily interest rate.

He went on to explain that the firm is in favour of expressing the cost of its short term loans in real money so that customers know exactly what they need to repay. He also pointed out that the APR charged by banks on unauthorised overdrafts can reach as much as 80,000%.

At the end of the day, there needs to be a system whereby unscrupulous lenders cannot rip off customers, he concluded.

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Payday advance lenders offering hassle-free ways to get cash

by Payday Loans

If you’re on the lookout for easy and hassle-free ways to get cash for an unforeseen emergency, than payday advance lenders are there for you in your time of need, ready to provide you with what could be an invaluable service.

It would be rare to find someone during the current economic climate who hasn’t been in need of a payday loan due to a financial emergency. If you’ve got a situation where you need cash as soon as possible but it’s still weeks until your next payday, you’ll need to find a way to get cash loans in a hurry or risk even more serious consequences.

Payday loan providers offer quick service for your financial needs, making it possible to get much-needed emergency cash in as little as 24 hours or less. Many providers offer same day loans, and nearly all do not require the formality of a credit check during the application process, resulting in anyone being able to get their funds both as quickly and as easily as possible.

Many traditional lenders have had nothing but bad words to say about payday loan companies because of the high interest rates charged on these same day loans. However, many people who need these loans can’t wait around for a bank or building society to get back to them, and others can’t go to their closest High Street branch because the economic realities of the recession have seen their credit ruined as they try to cope with high inflation combined with lost or reduced wages – no matter how hard traditional lenders try to dissuade those in need from getting the help they require.

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Firms using daytime telly to offer payday loans for bad credit

by Payday Loans

Payday loan companies are using daytime television to market payday loans for bad credit - yet some have criticised these loans for their comparatively high interest rates.

Payday lenders have developed a name for themselves for offering short term loans to those in need. Now, critics are rattling their spears for the next innovation from these companies – loans with 12-month repayment terms with high interest rates.

Several payday advance lenders have begun to offer these longer-term loans, all of which have in the neighbourhood of a 278 per cent APR. Critics point out that this would mean a monthly payment of £79.09 on a £500 loan, which would equate to a £949.01 total payment over the entire year, calling the rates ‘extortionate’ because they supposedly take advantage of those with poor credit.

Unfortunately, what these detractors fail to realise is that those individuals who need to turn to payday loans for bad credit are the same individuals who find themselves ineligible for traditional long-term loans from a bank or building society. The credit crunch and resultant worldwide economic recession has crippled the credit scores of many Brits, as they have had to cope with cost of living increases coupled with other financial setbacks such as jobs losses and a lack of wage increases – meaning that many have had no choice but to borrow heavily in order to make ends meet.

Many of these payday loan providers will air their adverts on daytime television in order to reach their target audience – Brits who have suffered setbacks at work and find themselves home during the day, trying to desperately find a way to pay their bills while struggling with unemployment or underemployment. Payday loans provide a much-needed service as budgets continue to be stretched tighter and tighter, as many Brits would be facing financial ruination due to an emergency that requires a financial expenditure at a time when every pound needs to go towards rent, mortgage, utilities, car insurance, food, clothing, or any number of other necessities.

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Are payday loan providers pulling Sheffield into poverty?

by Payday Loans

Thanks to new figures released by university academics, new fears have arisen that payday loan providers are pulling as many as 40,000 Sheffield residents into poverty.

Dr Pamela Lenton and Professor Paul Mosley of the Department of Economics for Sheffield University have published a book together regarding the issue. Investigating the lives of people who have to rely on no credit check payday loans, the book finds that these payday advance firms may be trapping people in a spiral of poverty and debt.

Many Sheffield natives excluded from traditional High Street lenders do not avail themselves of alternatives such as credit unions, said Prof Mosley. A director of both Moneyline Yorkshire and Sheffield Credit Union, Mr Mosley remarked that around 40,000 individuals in the region have found themselves trapped in a cycle of debt due to an inability to borrow from traditional lenders.

These Sheffield natives have no choice but to rely upon much more costly ways of borrowing just to make ends meet on a day to day basis, the economics professor commented. He was highly critical of payday loan providers, such as Wonga and Quick Quid, for charging extremely high interest rates, remarking that anyone who pays such rates have high difficulty in actually reaching escape velocity to break free of the black hole that is debt.

The book focuses on the time period starting in 2007, when the UK slipped into a worldwide recession. Running until 2009, it suggests the riots of the past summer might have been avoided if the less affluent were provided better finance through low-cost loans.

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Convenience and availability – the hallmarks of a payday loan

by Payday Loans

The hallmarks of a payday loan are convenience and availability, which makes them much more than the last resort that traditional lenders would prefer you view them as, according to financial experts.

Short term loans designed for busy Brits that find themselves in need of a few extra pounds until the end of the month, payday advance loans give you the opportunity to not have to worry about trying to find a way to make ends meet if a sudden, unexpected expense comes up out of nowhere. Many lenders don’t require you to submit applications in person, instead allowing you to apply directly on a website to get your funds, and with the added benefit of no credit checks, you can get the cash you need as long as you’ve got a job.

Applying for a payday loan is a painless process, with most providers offering easy and fast access to funds round the clock and seven days a week. Applications take only a few minutes to fill out, and lenders will then deposit the funds directly into your bank account the same day in most cases, which can help Brits out if they’ve found themselves in a bind and needing a little extra cash help immediately.

Traditional lenders are most likely threatened by payday loan providers and how popular they have become lately. However, with high street banks taking days or even weeks to hand down a loan decision, most Brits simply don’t have the luxury of waiting for a bank or building society to get back to them, while Brits with poor credit due to the economic downturn would be precluded from a traditional loan entirely – leading financial experts to admit that payday loan providers have a role to play in providing short-term credit to those who need it the most.

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UK households take up no credit check loans despite warnings

by daviddemar

Households in the UK have been repeatedly warned by traditional lenders to not deal with payday loan providers, but with the economy in its current state, the only way for many to get emergency funds is through no credit check loans.

Originating in the US, payday loans for bad credit have made their way to the UK recently as a result of the dire situation many Brits have found themselves in in the wake of the credit crunch and global economic downturn. With so many households in the UK struggling with higher costs of living in the face of jobs losses or cuts in wages, being able to go to a traditional lender for finance is nearly impossible because of credit checks – but payday loan companies do not need to run credit checks before offering funds to an applicant.

Payday loan providers also differ in another important way from traditional lenders that many borrowers never have to present themselves in person. No credit check loans were formulated with ease of use and convenience in mind, so nearly every provider will offer their services online over the internet – and some have even gone so far as to allow you to apply for funds via SMS text message sent from your mobile phone.

However, there is a price for all this convenience, though it’s not nearly as terrible as many traditional lenders will let on. Because there is no credit check on these loans, the interest rates are quite high – but payday loan repayment terms are designed to be paid back within around 30 days, which means that a high APR actually translates to about the same amount of fees you would pay through the use of an unauthorised overdraft.

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Should payday loan companies be better regulated?

by Payday Loans

Payday loan companies say they have replaced loan sharks and perform a service the banks are reluctant to provide.

Whilst this is true in the majority of cases, a report from the Office of Fair Trading last year suggested that 30% of instant cash loans are not paid off.

People who pay off their payday loan within the requisite time limit do not face huge interest charges, but if you do not meet the repayment date, you could be subjected to an annual interest rate in excess of 100%, not to mention hefty fees.

Money shop, a giant US-owned payday loan company is now planning a huge expansion in this country, primarily because the industry is largely un-regulated.

Scottish MP Margo MacDonald was recently forced to withdraw a bill concerning payday loans at Holyrood. Now, Dame Anne Begg, the MP for Aberdeen South, is encouraging Scots to sign an e-petition calling on Westminster to cap the cost of credit and put an end to legal loan sharks.

The coalition initially pledged to tackle the problem but it now seems to have put in on the back burner while it conducts further investigations. The government is concerned that regulating payday loan providers could see people once again turning to illegal doorstep operators.

Both Westminster and the Scottish parliament are keen to focus on providing debt advice to those with financial problems. However, we will always have a situation whereby some people simply don’t have enough money to make ends meet and they will continue to look to finance companies, such as short-term loan providers for help.

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Payday loan company to fund student financial education

by Payday Loans

One payday loan company recently made waves when it announced it will be forming a partnership with Credit Action in order to fund financial education for students.

QuickQuid, a provider of online loans, forged the link with Credit Action to provide funding for the DebtCred program from Credit Action. The payday advance company’s sponsorship will pave the way for 25 workshops to be conducted by Credit Action, which are estimated to reach around 750 students and impart the knowledge of financial wisdom and responsibility.

QuickQuid operations head, Arad Levertov, remarked that the lender is dedicated to encouraging responsible lending practices, and to that effect believes that education should be spread to as many individuals as possible. Managing your money in a responsible manner is only one half of the equation, said Mr Levertov, with lenders also needing to be responsible as well; this means not taking advantage of any one individual’s financial troubles.

A nationwide money education charity, Credit Action conducts a myriad of targeted projects on both the local and national levels. The charity’s projects emphasise providing aid to those individuals who have been in need of financial help.

The payday loan provider has hopes that members of the public will have more information on managing their financial details and that the educational opportunities will result in less people needing assistance in an emergency. QuickQuid remarked that it attempts to provide reliable and safe lending to its customers, and that it is careful to only grant application approvals to those individuals that meet the lender’s criteria for responsible lending.

Industry experts called the move ‘a breath of fresh air’ in a market that can all too easily prey on the unfortunate.

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Should payday loan companies credit check applicants?

by Payday Loans

New research the Debt Advice Foundation has discovered that 41% of consumers struggling to get to grips with their debts blame high-interest, instant payday loans for their financial problems.

The sector is undoubtedly growing at a rapid rate when you consider the number of online searches for the phrase ‘payday loans’ has doubled over the last 12 months.

According to the DAF research, 25% of people who had obtained an instant cash loan needed the funds to purchase food or other essential items for the home. A further 44% need the money to pay off an existing debt.

Worryingly, 49% of consumers who have taken advantage of these short-term loans said they were not fully informed about the interest rate levied on the loan and the total they would have to repay.

David Rodger, from DAF, explained that a lot of lenders point out that APR is an inappropriate way to measure short-term products and the majority of consumers are happy with the cost of their loan. The problem occurs when people do not repay within the designated time frame as the high interest rates quickly transform what had seemed like a manageable debt into an unmanageable liability.

DAF is also concerned that a lot of lenders offer no credit check payday loans. He thinks it should be obligatory for lenders to inform the credit reference bureaux when somebody takes out a loan and to check whether the borrower already has outstanding liabilities.

Consumer organisation, Which? recently published its investigative report into the payday loans sector. It discovered that poor practice was widespread, with some companies continually offering consumers larger and larger loans and leaving them vulnerable to major debt problems in the future.

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Plan ahead for your Christmas spending now, experts say

by Payday Loans

Payday loan experts say that you should begin planning ahead for your Christmas spending now, keeping in mind that you can always rely on payday loans for bad credit if things begin to get tight.

If the thought of trying to make ends meet while trying to shop for the festive season gives you a sinking feeling in your stomach, don’t forget that payday advance loans are quite easy to secure. These are quick loans, as well, which means that when you need a few extra pounds in a hurry, you can get your cash in as soon as 24 hours, or even less, and you won’t need to repay the loans until your next payday.

A good number of us in the post-recession economic climate may wince at the thought of trying to secure a loan from a traditional lender in time for Christmas, as the economic downturn has marred many a credit history for the worse. However, the lion’s share of payday loan providers do not need to run a credit check if you apply for a loan, which means you have nothing to worry about if your credit is a bit dodgy.

In order to get around this stumbling block, payday loan providers need to charge higher interest rates than you would see from a traditional High Street lender. However, the costs that go with the repayment of a payday loan are typically around what you would need to pay from an unauthorised overdraft – though in some cases, unauthorised overdrafts can actually be more expensive than the repayment of a payday loan.

However, best part about these loans is ease of use. Upon application, you provide the lender with your personal details, and then they will deposit your loan amount directly into your bank account – which means that when it comes time to repay the loan, the provider can simply debit your account for the same amount – as long as you’ve the money to repay the loan, you don’t need to worry about making a payment in time.

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Payday advance provider jumps the gun in Wisbech

by Payday Loans

One payday advance provider was so keen to open a new branch in Wisbech that they jumped the gun, as it opened its doors before it received planning permission.

Payday loan provider The Money Shop’s new Wisbech brance, located in Market Place, stated that it will expect to handle 100 no credit check loans a day on average, with Fridays seeing that figure rise to as high as 250 to 300. The new shop opened this past week, even though a public consultation was begun by Fenland planners to discuss a change to its use.

The shop, which was occupied up until recently by Size Up, a clothes retailer, but in order for its use to change, the local council must give their consent. The firm submitted their application fee the previous month, yet have decided not to wait for the council to hand down a decision on the change, and one spokesman for the council has stated that the firm is taking a large risk by opening before the application has finished winding its way through the planning process.

However, the shop, which also provides pawn broking services, opened its doors early last week. A spokesman for The Money Shop remarked that the fabric of the building had not been altered as a result of a carefully managed refit, adding that the company will work closely with the council in order to hope for a positive response and resolve any outstanding issues.

The change of use planning application that was submitted is expected to take more than a month to finish making its way through Fenland District Council. As there is a notice up on the building, comments from the public have been invited, said the council spokesman, who noted that the comment expiry date is 5 December.

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MPs and pressure groups targeting payday loan providers

by Payday Loans

Pressure groups and MPs have been targeting payday loan providers, calling for more regulation to the payday advance industry and raising questions as to the legal standards these firms may or may not be meeting.

Critics and detractors of no credit check loans have called firms providing the service ‘legal loan sharks,’ expressing extreme concern advance of this coming Christmas, with cash-strapped adults looking for ways to shop for the festive season and also meet their monthly expenses. Margo MacDonald, Scottish MSP, has recently sent a letter to the Office of Fair Trading requesting clarifications on the laws that apply to payday loan providers, asking whether or not these firms are subject to regulations that provide borrowers with a cooling off period of 14 days in which they can submit a loan cancellation.

MacDonald also drew attention to a law on the Scottish books that requires at least one witness at a minimum be present at the signing of certain kind of contract agreements. In the event of such a regulation being enforced in the payday loan market, the result could be the voiding of all such loans in Scotland, the MSP said, and as a result her team is now scouring the internet for any websites which it suspects may be breaching regulations prior to any additional discussions with the OFT.

Ms MacDonald’s letter said that her concern is that firms may be treading a razor’s edge between legality and illegality. Her constituents of modest means were particularly on her mind, the letter went on to say.

Meanwhile, Walthamstow, East London MP Stella Creasy is set to meet with Philip Collins, chairman of the OFT, soon in order to have a discussion payday loan firms.

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No current account? No problem, say payday loan providers

by Payday Loans

For those Brits that are worried about having an emergency line of credit, but think they won’t be able to secure a payday loan because they don’t have a current account, payday advance providers say not to worry – they can help you as well.

Payday loan providers have always been committed to working with their customers in order to provide them with quick loans. Much as these providers have pioneered no credit check payday loans, now many of these lenders have begun to offer loans to customers that do not have a current account.

Many of us are finding it harder and harder to make ends meet on a monthly basis due to the current state of the economy, with rampant inflation and jobs losses taking their toll on nearly everyone. However, payday loan providers offer an invaluable service to Brits who encounter a financial emergency in between paydays, and now you can take care of your business without worrying about if you’ve got enough cash left over to pay the rent, keep the lights on, or the refrigerator stocked.

Many of these loans are just as affordable as using an unauthorised overdraft on a current account, and in some instances, they’re even less costly, provided the loans are repaid promptly. It used to be that, in order to secure a payday loan, you had to supply a provider with exhaustive amounts of paperwork, but application procedures have been becoming more and more streamlined, to the point where you can get your cash as quickly as the same day, and at an interest rate that won’t break the bank.

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Payday advance providers now offering low interest loans

by Payday Loans

Due to the growth of the payday loan industry bringing more firms competing for borrowers, these payday advance specialists have begun to offer better rates on their lending in an effort to gain market shares.

Many Brits have seen evidence of this new competition for market share through increased adverts in their e-mail inboxes, as well as television sets, radios, and the websites they visit the most often. These low interest quick loans are especially suited to nearly every consumer, fulfilling nearly every desire due to the instant availability of funds and more affordable interest rates, experts say.

In the face of such facts, experts say that Brits need to keep a few things in mind if they want to get the most attractive rates on their loans. Rates can fluctuate wildly from provider to provider, but one good rule of thumb is the more that you seek to borrow and the longer you have before repayment is due, the lower your rate will be, so don’t believe the hype when you hear high street banks or building societies come out with propaganda and criticism of payday loans because of ‘exorbitant’ interest rates.

Many suppliers of low cost loans don’t have any type of high street presence, but this doesn’t mean that these providers can’t be trusted. You’ve undoubtedly seen aggressive advertising campaigns through the post, on billboards, radio, and television, but experts say that you need to be careful in selecting your loan provider in order to truly secure the lowest rate for the amount of cash you wish to borrow, so don’t be afraid to shop around for the best deals.

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Foyle MP hits out at payday loan providers in Derry

by Payday Loans

One MP in Derry has recently criticised payday loan providers in Derry, calling the lenders ‘predatory’ and little better than ‘legal loan sharks,’ according to payday advance industry experts.

Mark Durkan, MP for Foyle, accused purveyors of no credit check loans of exploiting the difficult circumstances facing many today due to the current economic landscape and locking them into extortionate and ever-escalating interest rates. Mr Durkan’s words come on the heels as the Citizens’ Advice Bureau reported an uptick in the number of people in Derry usingsuch loans, a figure the CAB found ‘worrying.’

Money advice supervisor for the bureau, Liam Doran, said that 12 months ago, only around one out of every ten people who came to him had taken out payday loans for bad credit histories. However, this year, the bureau said this figure has risen to between 25 and 50 per cent.

Dove House community group advice worker, Kathleen Bradley, also commented on the situation, claiming that the high-interest lenders of Derry were being permitted to profit from those suffering the most from the recession. Advice workers have said that the current dilemma is one of a ‘vicious circle,’ with static welfare payments, stagnant or declining wages, increased unemployment, and increased living costs leading to more and more individuals deciding to turn to high interest loans in order to make ends meet.

In a case of robbing Peter to pay Paul, many indebted individuals on low incomes or benefits have admitted to Mr Doran that they have had to take out more than one payday loan in order to make the repayments on an initial loan. Interest rates spiral on rolled over loans, with some firms operating out of the Derry region are reportedly charging more than 1,000 APR in these instances.

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Many choose option of no credit check loans to make ends meet

by Payday Loans

Many Brits have found recently that their monthly incomes need to be stretched further and further as the country encounters numerous increases to the cost of living and other related economic hardships, which has led many to choose the option of no credit check loans to help them make ends meet until they hit their next payday.

No credit check payday loans provide those in need with a valuable service. Many payday loan providers can offer as much as £750 in order to help individuals cater to their financial needs, which often arise unexpectedly and seem to always occur whenever you just happen to be short on cash.

There are very few requirements to be considered eligible for a payday loan in the UK. As long as you have a bank account within the country, have reached 18 years of age, and you are a resident of the UK, you can apply for a loan, and applications only require income information, contact details, and of course the amount you’d like to borrow.

There are other important benefits to using an online payday loan provider, as a variety of lenders can be accessed by simply filling out an application form once. Moreover, since no paperwork is needed for the majority of these applications, the process is simplified even further, leading to quick turnaround on applications – resulting in cash in your account as soon as the same day.

There are many payday loan providers currently touting their services on the internet. However, experts say you should select one with a proven track record of not only providing cash quickly and easily to their customers but also has a positive reputation for excellent customer service as well.

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Payday loans may face competiton from pawnbroker ‘borro loans’

by Payday Loans

Experts say that payday loan providers may soon face new competition in the quick loans department originating from pawnbrokers, called ‘borro loans.’

Providing short term loans to customers, borro loans are a service given by pawnbrokers which operate in a manner quite similar to your run of the mill payday loan. The most noteworthy difference is that the repayment of a borro loan can sometimes be much less expensive.

These loans are less expensive to repay because borrowers will secure an item against their credit, such as art work, a vehicle, a piece of jewellery, or some other valuable object. Doing so sets lenders up for secured instant cash loans, and that means interest rates are much lower on a borro loan than a payday loan due to its secured nature.

The typical payday loan will see you paying back an additional £25 to£30 on a £100 loan over a one month period. However, borro loans are much less expensive, leading to paying back as little as £6 on that same £100 loan.

Much like their payday loan provider counterparts, borro loans do not require a credit check to secure credit. Moreover, cash can be made available nearly immediately, which is an excellent service in the event of an emergency that requires a sudden expenditure, and with interest rates on borro loans being so comparatively low, payday loan providers may soon be given a run for their money by pawnbrokers and their new lending services.

The downside to these new types of loans is, of course, needing to give up possession of an item in order to secure your low interest rate. However, many borro loan services even offer free shipping on your items to make things more convenient.

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Have you told your partner about your payday loan?

by Payday Loans

It appears that people who rely on payday loans to see them through troubled times are hiding the fact from their partners.

Moneysupermarket.com has discovered that 10% of people who are in a relationship have a prepaid card or credit card that their partner knows nothing about.

Kevin Mountford, moneysupermarket.com’s head of banking, said individuals borrowing money from whatever source should make sure they are always on top of their transactions so that their financial situation cannot spiral out of control.

People taking out short term loans to meet unexpected emergencies should work out how much they need to borrow to see them through the emergency and never borrow more than they will be able to repay.

Mr Mountford when on to explain that people who are borrowing without the knowledge of their partner should remember that the money they are spending is borrowed and will have to be repaid eventually.

Meanwhile, the Citizens Advice Bureau has said that it’s too easy to obtain instant cash loans and the government should tighten lending regulations. However, Ed Davey, the consumer minister, said such a move could encourage people to turn to illegal loan sharks in desperation.

A lot of people find a payday advance a quick, legal way to get short-term credit. If the money is repaid promptly, this kind of loan can be cheaper than a credit card or unauthorised overdraft charge.

The government is currently conducting research but has not yet decided whether capping the interest rates on payday loans is the answer.

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Do you shop for a payday loan in your lunchbreak?

by Payday Loans

Wonga, the payday loan lender, recently revealed that it receives a large proportion of its applications for short term loans at lunchtime.

So far this year, the London online loans provider, received 200,000 applications between the hours of noon and 2pm from people with full-time jobs. The amount of applications regularly peaks at about 1.15pm, shortly after a lot of people have started their lunch break.

However, consumer organisation Which? has warned people to exercise caution when applying for a payday advance. Richard Lloyd, the executive director at Which?, explained that instant cash loans can appear to be the ideal solution for people who cannot make their salary last until their next payday, but they should only be used as a last resort, as they can work out to be an expensive way of raising funds.

Although consumers with a good credit record will probably find an authorised bank overdraft works out to be a better option, those with a less than perfect credit record may not find that luxury is available to them.

Which? compared the cost of borrowing £100 over a period of one month using overdrafts and payday loans. As expected, an authorised overdraft cost less than £10 at all the major banks, except the Halifax and Bank of Scotland.

An unauthorised overdraft with the Co-operative Bank, First Direct, Nationwide or HSBC will cost between £21.24 and £26.50, whilst a £100 payday loan from a company such as paydayuk.co.uk will cost £25.00.

The cost of payday loans does vary and consumers should make sure they shop around for the best deal before starting their lunchtime application.

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Londoners use no credit check payday loans the most

by Payday Loans

According to recently released research findings, Londoners make use of no credit check payday loans the most often.

A payday loan provider recently published a research study detailing how middle earners living in London are most likely to take out such a short term loan. Londoners seem to go through their wages faster than other Brits, the research study found, indicating that they have the heaviest reliance on payday loans to make ends meet on a month to month basis.

The research study analysed the borrowing behaviour of some 75,000 Brits who had applied for payday loans from March of this year. The results indicated that Londoners were the ones who availed themselves of the service the most, followed closely by residents of Liverpool, Leeds, Birmingham, and Manchester, and then those living in the Scottish cities of Edinburgh and Glasgow.

One of the research study’s authors, payday loan expert Giles Coutts, commented on the findings, stating that he thought there was an all too common misconception that the only ones to use payday loans were individuals residing in areas of high poverty or those who had low levels of income. However, it seems that those in need of payday loans aren’t low income earners at all, and the stigma of using such a service should be dissolved.

Mr Coutts also said that, with the current economic turmoil gripping the country, payday loans were one option that harried UK consumers used to manage any expenditures that they weren’t expecting or neglected to plan for. Other research has shown that payday loans are on par with using an unauthorised overdraft in terms of the cost on a month-to-month basis.

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Avoid short term loans if you’re already in dire straits

by Payday Loans

According to one payday loan expert, Brits currently finding it a struggle to keep their heads above water financially should avoid short term loans, only using them as a last resort.

Informed Choice chartered financial planner, Martin Bamford, remarked that cash-strapped Brits should first exhaust every possibility for finding quick loans before resorting to payday loan providers, as the added cost of doing business with such a provider can oftentimes lead to expensive repayment. Mr Bamford said that such loans should nearly always be the last place you turn to, as raising short term cash through them can be ‘hideously expensive.’

The chartered financial planner said that under no circumstances should you end up using these payday loan facilities on a regular basis, because doing so can quickly exacerbate any debt problems people are currently experiencing, which could make an already bad situation quite worse.

A small but significant number of payday loan providers in the UK have been revealed to possibly have been engaged in quite spurious behaviour, with reports of certain market players potentially breaching the Consumer Credit act, inflating APR interest rates, and having lacklustre privacy provisions set in place to protect the personal details of their customers.

The payday loan industry was quick to respond to the allegations, stating that not only does it provide a valuable service to its customers in a time of lingering distress from the worldwide banking crisis and resultant economic downturn, the majority of payday loan providers were legitimate businesses and did not engage in such questionable practices. With the cost of living rising at an accelerated rate in the UK, industry leaders said, consumers’ bills are getting larger while wages have remained mostly stagnant.

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