Payday Loans | Payday Loans

Lancashire councils seek to limit short term loans

by Payday Loans

Local authorities in Lancashire are claiming they should have the ability to limit the number of short term loans providers springing up in town centre shops, MPs say.

The number of stores springing up in the region providing payday loans to those on benefits and low income earners has grown steeply over the past 18 months, ministers say. Some 15 shops now operate in Accrington, Burnley, and Blackburn supplying instant cash loans to those in need.

Local councils have little power to control the number of such businesses proliferating in town centres since they are classified as retail outlets. This means that the lenders need not concern themselves with seeking permission from the council to set up shop if they move into premises that were recently vacated by shops.

Graham Jones, MP for Haslingden and Hyndburn, remarked that local authorities need the ability to make decisions without interference from Whitehall. There is simply not enough localism for Mr Jones’ taste, he said, citing not just payday advance lenders but amusement arcades and other such off licence establishments, adding that councils need complete freedom in deciding who is allowed to set up a business within their town.

Andrew Stephenson, MP for Pendle, also commented, stating that there are a large number of deprived areas in East Lancashire where councils could deem the presence of certain types of shops as wholly inappropriate. However, Mr Stephenson added that the Government is empowering local communities to have control of decisions such as these through the Localism Bill.

News Payday Loans

Have you got any spare…rooms?

by Payday Loans

How would you fancy opening up one of your bedrooms to pay off your debts? You’d be by no means on your own with the line of thinking as record numbers of householders are doing so to pay off payday loans and other types of lending incurred over Christmas, according to one of the directors at spareroom.co.uk, Matt Hutchinson.

As the deadline to repay loans drew closer towards the end of the month for payday loans taken out to live a little over the 2011 festive season, details in one recent report suggest that 6,000 households who had a room going begging put it to use in January. As a comparison, for those who are a bit vague on how that figure compares with previous periods, it is a massive 83% up on December 2011 and more than a fifth up on the same month in 2011.

The report also suggests that the overall economic position is contributing to the growing trend. There are hundreds of thousands of couples who are struggling to get on the property ladder so for individuals wanting to fly the nest, with council waiting lists being given priority to non-UK patrons and little chance of raising a deposit on their own, there is a huge market for single room accommodation in private dwellings.

It is hardly a surprise that people are considering paying off short term loans and credit cards in this manner. The average income from renting out a single room clocks in at £398 per month. The closer you get to London, then that figure rises dramatically. A room in the capital will set you back, on average, £677 a month (that’s three times my first ever mortgage on a three-bed terraced, which wasn’t that long ago!).

This method of generating income has been well investigated by the government and HM Customs and Excise. There is an official ‘rent-a-room’ scheme with a tax-free threshold that householders can earn before having to pay tax, and it is quite generous. But with the average UK monthly rental at £398/month, if anyone has chosen this option as a quick cash injection, it would have to be declared as it just tops the tax-free limit of £4,250 per year.

Matt Hutchinson added that savvy householders have got the mood of the country just right by taking in lodgers. People have realised that, although inflation is rising as well as fuel duty and heating bills, which are not necessarily in the inflation figures that are touted in the media, wage rises, overtime and the opportunities for furtherance of careers are just not there to match the ever-increasing demands on the household budget. An extra £4,800 per room is a welcome buffer to put between you and your credit card, mortgage and payday loan commitments.

News Payday Loans

New research finds 70% of families ‘on the edge’

by Payday Loans

In excess of 70 per cent of families in the UK are ‘on the edge,’ relying on payday advance lending and credit cards to make ends meet, new research findings recently discovered.

The research survey found that these families are walking a razor’s edge of poverty, facing financial ruin if their income falls or if they are presented with the kind of emergency that would prompt them to take out payday loans to cover the expenditure. The new research discovered that 20 per cent of parents skipped meals to provide enough food for their children, while 25 per cent have had to resort to credit cards, and one out of twenty have been taking out short term loans from payday lenders to keep things together.

The study also discovered that many families – nearly half – have had to face the reality of either selling or pawning their personal property in order to generate extra cash to supplement their meagre incomes. Meanwhile, around one out of every six have developed stress-related illnesses due to intense worry over not having enough money to pay the bills.

The survey respondents indicated that more than three out of every five families are short of money on a weekly basis, while nearly one out of three have had to resort to family and friends, borrowing money to help out with the bills.

In response to the survey results, one Department for Work and Pensions spokeswoman remarked that the welfare reforms the department is currently working on will make a massive difference to some of the most needy families in the UK, lifting more than one million Brits out of poverty. The Department vowed to continue to work in supporting low income earners in the UK.

News Payday Loans

Cash Converters online lending grows rapidly, but at a price

by Payday Loans

There is always a risk when you’re offering no credit check loans that you will be stung to a certain degree. The very nature of lending money to an individual who has the ability to pay back a short term loan but has a history of not doing so puts the financer in a position of threat from the outset.

And Cash converters have seen the evidence first hand since they accepted the gauntlet of competing with other instant payday loan companies by setting up their very own online loan facility. However, the growth of its bad debt sector is fortunately overshadowed by the massive leaps forward they have made this year in its lending to customers who are actively improving their credit rating by making their repayments on time.

Back in December 2010 their loan book showed outstanding balances of £2.3M. According to figures just released, move that same balance sheet on twelve months and it has swelled beyond all expectations, now showing debts of £8.5M. Considering that they are, in essence, a pawnbroker, that’s a massive hike in business – in anyone’s books.

The growth has not all come from the quick cash advance online loan facility, though. Much has come from punters cashing in their assets through the doors of its 208 High Street stores. And it is real growth, not just increased volume from an existing customer base.

Of those applying for a payday loan on their website, launched only in October of 2010, only 4% were recognised users – the other 96% of applicants were brand new customers. This is reflective of the short term loans market as a whole, where no credit check loans have been a godsend for those families – 70% according to one recent study – struggling to make ends meet.

Irrespective of the overall growth, that figure could be a whole lot better if Cash Converters could eradicate the niggling 11% of borrowers who have defaulted on their repayments, a figure that has risen more than 20% in the last six months of 2011.

They are, however, addressing that situation to try and bring that 11% down to a more manageable figure. Companies can insure against bad debt, but the cost of cover when the conditions are so relaxed is steep, especially when the amount is as high as the report suggests. In order to cut down that risk, this year will see more selective processes for those who they lend money to, refining their existing customer base and employing collections managers whose sole purpose will be to come to an agreement to retrieve the money that is showing as outstanding for the current payday loan book and any future defaults.

As organisations such as Cash Converter realise gains in the market that are far greater than they anticipated, they position themselves to be able to choose their risk. If other companies follow suit, we could soon be seeing the beginning of the end for the no credit check loan. Where will seven out of ten families go then, to put food on the table?

News Payday Loans

Labour MP in rhetorical rant at payday loan firms

by Payday Loans

Labour MP Stella Creasy is in danger of being labelling a blinkered bigot, if her outbursts at payday loans continue without any reasoned argument to back up her claims.

And The Mirror are just not helping by labelling certain sectors of the finance industry (short term loan and payday loan lenders) as charging ‘extortionate rates’ in the hope of sensationalising the story which, on the grounds of what was printed, hardly merited the space devoted to it. Instead, they published the same huge picture of Ms Creasy in the exact same manner as they did the last time the MP vented her crusade against payday loans when the newspaper acted as the mouthpiece.

The real story should be: at last we are seeing evidence of financial planning being brought to people when they need it most – at as early an age as possible. We should not be condemning those payday loan companies who are giving themselves selflessly to bring an education to children whose parents, if anything like the average household in the UK, are struggling with finance and therefore rendering themselves unlikely as voices of authority or of little use as guides through the ever changing world of modern day finance.

I ask, who better to teach children about the growing problems of debt in society than firms in the largest single growing financial sector in the UK, placed right at its cutting edge? Perhaps Ms Creasy would like to volunteer herself or one of the last Treasury from her party, who did so well with finance that they left the inheriting Con-Dem government the infamous ‘We’ve spent it‘ note, to educate our children about expenditure?

Even though Young Enterprise, running the campaign, have categorically stated that the Money Shop staff taking part in this tour of financial education are outright banned from promoting their own brand – it is their market knowledge that is being drawn upon – Ms Creasy still managed to fire a shot across the no credit check loans sectors’ bows, although perhaps not reading the small print first, as she suggested the payday loan sector were being ‘helped’ to promote themselves. As Catherine Marchant, Money Shop’s chief executive, explained – her staff simply work through a pre-printed booklet with students to give them a better insight into the way the wheels of finance turn today, given its recent upheavals and innovations, to which the payday loan sector has contributed greatly.

According to the report, Ms Creasy continued, stating that she held the belief that such organisations ought to be excluded from the education system until their rates were regulated and capped. But what comparison can be drawn between a payday loan company being governed by legislation outside of their control and them offering of itself to help future generations manage their finances in a more controlled manner is unclear. Likewise, Ms Creasy is quoted as saying that her parents share her concern. Sorry, but what has that got to do with the price of fish?

In a related story, we again see a legitimate business turn the other cheek as Young Enterprise abandoned one such session in Kent due to their concern that the protests seen outside Money Shop stores would find a way into the schools where it was offering its support and knowledge. The world’s gone mad.

News Payday Loans

Payday loans: good in a pinch, but how do you rebuild credit?

by Payday Loans

Payday loans provide a much-needed burst of emergency funds in the event that you need instant cash loans to cover an unforeseen occurrence, but many Brits are struggling with an inability to make larger purchases because of poor credit history, leaving them wondering if there’s any way to repair their credit scores.

Alternative lending sources such as payday advance firms have grown wildly popular because they offer no credit check payday loans to those who have less than perfect credit but still need emergency cash. However, you can’t rely on a payday lender if you’re looking to finance a new car or to buy your first home, but Brits who want to rebuild their credit oftentimes don’t know the best way to go about accomplishing this goal.

However, there are ways to borrow money in ways that can actually aid you in rebuilding your credit rating. There are several credit card providers that they bill as specially formulated to repairing besmirched credit. With even just a few minor mistakes, such as exceeding your credit limit or missing a payment, can do serious damage to a credit rating, these cars can sometimes be quite beneficial for those looking to come back into the fold, despite their low credit limits and high interest rates.

However, industry experts have warned that these types of cards should not be relied upon, as the best way to actually rebuild your credit is to only use the card sparingly and to repay any purchases as quickly as possible. You need to prove that you can be responsible when it comes to handling credit in order to improve your credit rating, the expert said, and the best way to do that is by staying below your credit limit and making your repayments in a timely manner.

Another expert said that just because these cars are billed as ‘credit rebuilding’ or ‘credit repair’ cards doesn’t mean that your credit rating will automatically improve upon taking one out. You can sometime send up even worse off than you were before, especially because the interest rates on these cards can be quite expensive.

News Payday Loans

Is it any wonder we’re feeling the pinch?

by Payday Loans

For all of us who were not born with a silver spoon in our mouths or have not been lucky enough to scoop the Lotto jackpot, it’s safe to say we’ve all been in a position, at one time or another, where we’ve at least considered lending a few quid to see us through a sticky patch or considered a short term loan to last us until the next payday.

When we’re young and just starting out on our own, that instance can be more often than not; being inexperienced in the ways of finance, it’s very difficult to know whom to turn. Your folks can’t bail you out every time and the amounts you want to lend are perhaps too small for a bank to even consider, let alone the fact that, without some sort of credit history you have no credit rating. Without a credit rating, you can no longer start to build a credit future, let alone a history (how does that work?).

Given that backdrop, it’s easy to see why payday loans have become such a prominent feature of today’s society. A shallow economy has put a stop to the historical milestones that accompanied your late teens:
1. 16 national insurance,
2. 17 driving license,
3. 18 credit card,
4. 19 university/job.
Nowadays, with auto insurance so high, your #2′s gone down the swanny, credit card companies only lending to those who have money (yeah, another big ????) so #3′s out and with so few jobs about or having to stump up £9k for Uni, you’re lucky to get an apprenticeship at 19, and that’s after you’ve done two years’ FE at college, sixth form or academy which has more or less put the mockers on #4. And as for getting a foothold on the property ladder, well – current predictions are that a whole generation is going to miss out on being first-time home-owners without anything but a shared mortgage.

This is a very vicious circle. Children are staying at home longer because, for any of the above reasons, they cannot afford to move out. Even if they’re on an apprenticeship, they cannot be considered to be bringing in a liveable wage, which is putting more and more pressure on the household budget.

For teenagers who see their friends in the latest designer gear or with the latest gadget, they expect their parents to deliver at least some, if not all, of the goods so that they’re not ridiculed by their peers. Where does that parent turn?

If they’re on a low income, there’s little chance of getting promotion as companies are still looking at cutting back and overtime is just two four-letter words joined together in the plight of the UK economy.

Literally every aspect for the lower income bracket of society is pointing them towards payday loans, as there is nowhere else to turn to provide at least a little luxury in this grim shadow of a rotten global economy.

According to one recent study, 3.5M people will apply for a payday loan or other type of quick cash advance in order to please one member of the family; it has even been suggested that over a quarter of existing pay day loan customers are using the facility to put food on the table.

Based on the evidence above, is it any surprise?

News Payday Loans

Payday lenders capitalise on Valentine’s Day spending

by Payday Loans

A select number of payday advance lenders have chosen to capitalise on the spending that traditionally accompanies Valentine’s Day by offering payday loans, with some consumer groups highly critical of the move.

As far as payday lending goes, the actual cost of the loan is rather modest in comparison to some more disreputable lenders, as the promotional deal – £300 for a period of 31 days – will only cost a borrower an additional £75 to repay. This equates to an APR interest rate of around 1,700 per cent, which may appear high in comparison to a credit card rate but is much lower than some other payday lending rates – and is by far much more inexpensive than relying on unauthorised overdrafts for the same amount.

Despite the comparatively inexpensive manner of the instant cash loans offered by lenders, campaigners say that reliance on payday loans for anything but emergency funds can lead to a slippery slope of spiraling debt. Missing a repayment on one of these loans can spell financial disaster for many, critics say, as payday loans that ‘roll over’ can result in massive charges and fees being levied on the borrower.

However, reputable lenders say that they inform their customers about the downside to payday loans, explaining to each and every one the real costs involved in repaying such a loan. Moreover, many lenders will even refuse to extend credit to a borrower if they cannot demonstrate their ability to repay the cost of the loan plus interest, but this particular breed of lenders sadly seems to be more of the exception than the rule, as too many unscrupulous lenders target financially vulnerable classes of Brits such as students and members of the military.

News Payday Loans

Conquering debt mountain – plan a

by Payday Loans

from: Debt mountain – facing up to the challenge

When you are struggling to scale a mountain of debt and the high street banks have all but turned their backs on you, there a generally three options available to you. A payday loan may be suggested to you at first, but because of the recent bad media attention you may be dissuaded. If you can obtain a consolidation loan, that may seem like a reasonable option at first, but there are pitfalls. And then there is the IVA (individual voluntary agreement), which can seem like an ideal solution in the short term, but the long-term effects for your credit rating could be devastating.

Firstly, you have the option of the debt consolidation loan. Up front, this looks like a reasonable solution. Take all of your debts, which you will owe to several creditors taken out at different times with differing balances due to each account, wrap them all up in one convenient payment to one creditor.

However, the older your debt, you may find it has a smaller interest rate than the new consolidation loan you are being offered. In real terms, you will be paying back more for those existing balances with lower APRs than the consolidation loan you are taking out. This could be due, in part, to the fact that your interest rate is calculated on our creditworthiness. If you have a proven history of defaulting on payments to your credit card, mortgage or other loan, your new APR will reflect that.

This is a long way around doing it, but call around each one of the companies to whom you owe money and ask them how much is left to pay on the loan – the amount you will end up paying, not the balance – and take that into account when totting up what you will actually have to pay back on your single, new loan. You may well find that you are paying back, in the long term, a lot more than with the individual loans with certain conditions.

And that ‘long-term’ could mean a lot longer than you have left on one, some or all of your existing debts. If you were looking forward to a period when you would be free of one of those debts, you will sacrifice that by lumping that balance in with a new consolidation debt.

It should also go without saying that discipline has to be a strong point for you. Once the other debts are paid off, you will suddenly find overdrafts, store accounts and credit cards available to you again, as you will (should!) have paid off all of those with the consolidation loan (some banks may insist on doing that in their presence, once they issue the funds). Under no circumstances be tempted to lend against those cleared lending facilities – it is more difficult than you think when you are budgeting to pay back the consolidation loan.

payday loans and IVA’s reviewed in the next article – “Conquering debt mountain – plan b”

News Payday Loans

Most workers feel the squeeze just 2 weeks after payday

by Payday Loans

New research findings from a major lender recently revealed that the majority of workers in the UK run into financial difficulties just two weeks after their last pay cheque, leading many to turn to payday loans to help bridge the gap in their finances.

The report, compiled and released by high street lender Halifax, placed heavy emphasis on the difficulties faced by workers finding it a struggle to find the cash to pay their spiraling household bills amidst the pay freeze. Things have become so dire for a good 10 per cent of those interviewed by Halifax that they begin worrying about their finances just seven days after receiving their pay for the month, leading them to turn to instant cash loans in an effort to gain some financial security.

Halifax interviewed 2,000 adult Brits in order to compile the report, which revealed that the vicissitudes of the current bleak economic landscape is fostering an entire generation of people so obsessive about their bank balances that 20 per cent reported checking their accounts daily. Bank of England governor, Sir Mervyn King, recently commented on the issue, stating that not since the 1920s had their been a period of time so long where real wages failed to rise.

Approximately 1.5 million households in the UK may be facing even tighter squeezes, experts say, thanks to cuts in child benefits leaving a rapidly growing number of Brits no choice but to resort to payday advance lending in an effort to make ends meet. However, responsible payday lenders say that using payday loans as a long-term solution to financial problems is unsustainable, and attempting to rely upon them can result in causing even more problems.

News Payday Loans

Credit card companies lash out at payday lenders

by Payday Loans

Credit card companies have recently lashed out at alternative forms of high-interest credit in an effort to remain relevant in a financial landscape where the no credit check loans industry has been growing by leaps and bounds lately.

With many Brits finding it decidedly more difficult to obtain credit from traditional sources such as banks and building societies, many have turned towards payday advance firms for their short term lending needs. Moreover, those that still have credit cards are paying off more than they are spending, with outstanding debt declining by 5 per cent in the last year, according to a new PriceWaterhouseCoopers report.

In order to combat this trend, credit card companies have begun a campaign to encourage credit card use by drawing attention to the benefits of paying with plastic, especially in comparison to the relatively thin benefits provided by payday lenders to their customers.

One such benefit pointed out has been the consumer protection you gain from purchasing items over £100 with a credit card, as the Consumer Credit Act makes it compulsory for the card provider to refund the price of a purchase if the retailer goes bust or something goes wrong with the purchase. Payday loans don’t come with a similar guarantee, of course, but lenders are quick to point out that most card purchases are well under £100 as Brits shy away from making large purchases using their credit cards, thus making the actual benefit only applicable in a dwindling number of instances.

Of course, this benefit only applies to people who already have credit cards. For the nation’s low income earners who have been struggling with pay freezes and rising household bills, credit cards can remain tantalizingly out of reach, but payday loans do not require credit checks, making it easy for Brits in need to get the cash they require quickly and without having to jump through too many hoops.

News Payday Loans

Disreputable loan providers under fire from watchdogs

by Payday Loans

Disreputable providers of payday loans have encountered withering fire from watchdog groups recently for using dishonest and misleading tactics, including promoting instant cash loans as an excellent way to raise some extra money for things such as cosmetic surgeries and shopping trips.

Many providers of no credit check payday loans follow responsible lending practices. However, many less scrupulous lenders have been deliberately targeting certain classes of lenders, such those that target women by featuring colourful adverts depicting shopping trips while others tout their loans as excellent for generating the cash needed for cosmetic surgical procedures.

While payday lending has long been accused of nothing better than legal loan sharking, economic experts say that the short term loans provided by payday lenders are invaluable for those who encounter a sudden financial emergency in between pay period. However, since these loans are unsecured, interest rates can be high, as evidenced by APRs upwards of 1,000 per cent, and penalties for missing a payment deadline can be quite high.

However, industry experts point out that since payday loans are designed for the short term – typically a month – using an annualised rate such as an APR will result in massive rates sometimes as high as 4,000 per cent. The true cost of repaying a loan is typically around £10 to £30 per every £100 borrowed, experts insist.

Reputable lenders will make sure that their borrowers are aware of all the risks of taking out payday loans, and will provide them clear and concise information regarding the efficacy of such loans in the short term. However, a growing trend with unscrupulous lenders has been to figuratively widen their net by enticing borrowers to take out loans for more than simply emergencies, encouraging them to use the loans to make frivolous purchases with little thought to the consequences facing them when it comes time to repay the cash.

News Payday Loans

Use of no credit check payday loans on the rise

by Payday Loans

According to recently released statistical data, the use of no credit check payday loans is on the rise in the UK, with four times as many Brits using these short term loans in 2009 than they did in 2006.

1.2 million individuals in the UK availed themselves of payday loans in 2009, with a sum of £1.2 billion in total lending sums. 3.5 million Brits alone are expected to take out one of these highly popular loans over the next six months, research also said.

Vincent Bond & Co’s managing director, Steve Rees, said that payday lenders have become increasingly ppular since the beginning of the recession in 2009. However, attempting to manage massive debt by taking on more through the use of payday lending can lead to many types of problems, Mr Rees cautioned.

Using payday loans as long term solutions for debt can make matters much worse, the debt advice firm’s managing director also said. He did say that illegal loan sharks are even worse, as damage to your credit score could be the least of your problems if you fail to make a repayment.

The research findings also demonstrated that job losses are leading many to fall into debt. One of the firm’s clients reported that he had to relocate in order to find work after being made redundant during the recession, but as his new job paid less than his old one, his debt levels began to increase to unmanageable levels.

The research study also discovered that bankruptcy was rated as overwhelmingly effective in regards to finding solutions to problems with debt, as a massive 93 per cent listing the solution as a successful one.

News Payday Loans

Families in Crewe have above average debt, experts say

by Payday Loans

Families in Crewe have debt levels almost more than £16,000 the national average, according to the Credit Consumer Counselling Service.

Crewe households may also be taking up payday loans as a way of coping with debt in an irresponsible manner, as these short term loans are not a sustainable way to deal with long term debt levels that now stand at an average of £23,177 per family. This sum is much higher than other areas in the south, such as Reading, Tonbridge, and Oxford, and research indicates that the high cost of living is the source of the debt, not the cost of luxuries.

Critics of the no credit check payday loans industry have wasted no time in blaming lenders for increased debt levels in Crewe by stating that these payday advance providers are targeting the area. The Cheshire Neighbours Credit Union’s chief executive, Julie Williams, accused lenders of increasing the amount of advertising they do at peak television watching time, which draws people into a spiral of debt repayments they cannot afford to make.

Ms Williams said that the most alarming thing about the Crewe area is that there is not a lot of spending occurring, as the number of large screen televisions and driveways with two cars is decidedly low, leading her to believe that people are simply ‘borrowing to live.’ However, a number of debt advice agencies located in South Cheshire have come forward to help those in need by offering help, such as Christians Against Poverty charity which recently opened a debt centre at the West Street Christian Fellowship in Crewe.

CAP spokesperson, Tim Oakley, reported that demand for aid in the area has already been high, even though it has just been two months since the debt centre opened its doors.

News Payday Loans

Britain’s biggest payday loan company agrees to roll-over restrictions

by Payday Loans

There has been a lot of debate in Britain and some other countries recently about the effect that payday loans companies are having on people getting into debt. Now it appears that Britain’s biggest short term loan company, Wonga has at least agree to limit the number of loans roll-overs to three in a move that has been introduced by the FLA – the Finance and Leasing Authority.

Payday loans are usually short term loans which are given out for limited periods to people who have urgent cash needs like rent or mortgage payments. Most companies charge comparatively high interest rates on the loans – anything up to 4,000% per annum and some of them do not ask for credit checks. The companies, which have been growing in number over the last two years have been criticized both for the high interest rates and the lack of credit checks, which it has been claimed by critics, leads some people even further into debt.

Wonga, which signed up for the new roll-over curb last Wednesday, charges up to 4,214 % for some of its loans. This means that if a person takes out a loan for one hundred pounds for a month would have to pay back about forty pounds at the end of the period. The new curb will prevent anybody being able to extend the loan more than three times.

Wonga is currently the only payday loans company which is a member of the FLA, which is the association that has brought in the restriction. Other short term loans companies belong to other credit associations or to none at all, but may soon have to follow suit.

Both the OFT and the BIS are having a long, hard look at the practices of short term lenders and may bring in compulsory restrictions on their activities.

Some of the criticism of instant cash loans companies, especially those offering no credit check loans is that they have been encouraging borrowers to roll over their loans month after month, getting progressively more into debt.

News Payday Loans

Are women turning to payday loans at an increased rate?

by Payday Loans

New research has shown that, with the global economic downturn and stricter thresholds to be met on borrowing from traditional sources, more women are instead turning to payday loans in order to gain access to cash loans.

This trend has become a cause for concern to some payday advance industry critics, as they say major lending firms have embarked on expensive television advert campaigns, spending millions to purchase air time during programmes such as Friends and Glee. Other lenders have set up online websites in order to target women specifically, and these experts say that language on the sites stresses the ‘socially acceptable’ nature of taking out such a loan.

Anti-debt campaigner and Labour MP, Stella Creasy, is one of the largest payday industry detractors. Ms Creasy said that women are ‘falling prey’ to payday lenders.

These women, who have a regular income and are working, are able to repay a portion of their lending, she added. However, women are subsidising these lenders through paying for extensions and penalties on any unpaid portions of their loans, Ms Creasy also said.

Women seem to be nearly as likely to be saddled with heavy debts as their male counterparts, according to a recently published report from RSM Tenon. The accountancy firm found that out of last year’s insolvencies, women made up 49 per cent of the total figure.

Ms Creasy has called upon the government to more tightly regulate the payday lending industry by both instituting a cap on payday lending interest rates and to offer alternative forms of credit for those with financial vulnerabilities.

News Payday Loans

Debt settlement last resort for stricken Americans

by Payday Loans

As recently reported, the United States’ are looking into their payday loan industry, for the states which allow it, as it is now seriously concerned about the number of its citizens falling into debt traps. As such, they are warning their citizens about the dangers and pitfalls of falling further into financial hardship, highlighting the fact that many Americans have, like UK citizens, have relied on credit for years. Now that well has run dry and it’s time to pay back what they’ve borrowed, it’s an uphill struggle that many thought they’d never have to face. For some reason.

In order to get Americans back on track, one advert for a debt settlement firm has proffered the top five mistakes that individuals make when they think they are helping to solve their debt crisis but are actually making it worse. Strangely enough, four out of those five mistakes could be partly, if not totally, eradicated with the help of payday loans. Perhaps, conversely, the problem would not be so bad if they had, in The States, access to as many online payday loan providers as we do here in the UK.

The first recommendation is to stop paying just the minimum requirement on your credit card bill as you are eating into your actual debt by very little doing this. Even worse is to miss a payment, altogether. The interest accrued by missing a payment can be more than the one-off payment due on a short term cash advance.

They also suggest leaving friends and relatives out of the equation, which is excellent advice. Not only could lending money ruin relationships built up over a lifetime, but also the temptation is not to pay it back at all as ‘they will understand’. With a payday loan, the amount and dates are set, so you not only guarantee making that payment but you start to regain the habit of making regular commitments to solving your financial issues.

Using debt consolidation where the loan you are taking out to put all of your debts ‘under one roof’ has a higher APR (because of your credit risk) than the majority of the individual loans you have taken out in the past may make repayments more convenient but is actually increasing the amount you owe, rather than reducing the debt.

One of the reasons may be prevalent in the US, but perhaps not so in the UK and that’s to pay a cash advance to a ‘debt counsellor’ who only makes matters worse by having it away with the sum you’ve managed to scrape together for their never-appearing services. Online payday lenders do not charge a fee for their service upfront but make their money on the agreed level of interest set at the time you decide how much you want to borrow and over what period you want to repay.

And the last no-no on the list is to declare bankruptcy. It may seem like the only viable option, but the long term effect on your credit rating is often irreversible. On the contrary, regular on-time payments towards a short term or payday loan can repair your credit history.

News Payday Loans

NI households to experience drop in disposable income

by Payday Loans

Households in Northern Ireland have been predicted to experience a drop in the amount of disposable income they will have access to this year, according to the Irish League of Credit Unions.

The industry body, which has been promoting the uses of credit unions in lieu of payday loans, revealed through its Household Income Tracker survey that fuel bill increases have led to a high number of people in Northern Ireland to turn to instant cash loans from moneylenders in order to make ends meet.

The League conducted a survey of more than 500 people how household income drops have taken its toll on them, discovering how the typical NI consumer has to pay around £131 every month on fuel. As a result of these cost increases, the League claimed that in excess of 100,000 people had to take out short term loans in order to cope with other outstanding monthly bills.

Irish League of Credit Unions spokesperson, Rosemary O’Doherty, remarked that it was abundantly clear that people in Northern Ireland have the expectation that they will experience new financial pressures in 2012. Ms O’Doherty expressed particular concerns that so many have turned to payday loans and other sources of what she called ‘high interest’ credit.

According to the League’s research, one out of every four who took out payday loans did not have the ability to meet their repayments in a timely manner. Moreover, around 12 per cent of all adults in NI – around 170,000 people – have no money left over every month after paying their bills.

News Payday Loans

Call for interest rate cap on short term loans backed by some in the industry

by Payday Loans

The debate about the merits or otherwise of the payday loans industry have been debated by just about every parliamentary body in the country with the focus on capping what are seen as excessively high interest rates. The call to cap the rates has received a rather unlikely backer in the form of a director of one of the payday loans companies himself, Gary Miller-Cheevers, director of speedeloans.

The debate about the effects of the short term loan industry on indebtedness amongst Britain’s population was debated in the House of Lords recently and Mr Miller-Cheevers has supported the campaign by the Labour Minister of Parliament, Stella Creasey to cap rates on products like those sold by Mr Miller-Cheevers’ company.

The effects of the growing success and expansion of payday loans has been noted by the Debt Advice Foundation who have said that ten percent of those people who have applied for an instant cash loan did not really need one. The Foundation goes on to say that those people who take out short term loans for things they really don’t need are not helping themselves in the long term and can quickly get themselves much further into debt. The Foundation advises such people to get help with improving their debt reduction skills.

There has been considerable debate and concern over high cost credit loans with charities and trade organisations expressing their worry that this type of product can drive lenders into an ever deepening spiral of debt if they use the loans incorrectly.

Mr Miller-Cheevers said that loans could be expressed in a different way from what they are now, which he thinks can be misleading and leads to confusion. At present, payday loans are usually stated using APR and EAR. As Mr Miller-Cheevers says, these terms are normally reserved for products like overdrafts. He thinks that the loan repayments could be more simply expressed in direct monetary terms.

He went on further to say that this type of short term loan should be more transparent. He said that the term EAR stands for an annual rate of interest, as used for a bank overdraft while an APR takes into account extra fees and charges which EARs don’t. He says that for payday loan companies to use these terms almost interchangeably results in customers being confused about exactly what they have to repay.

News Payday Loans

Welsh assembly members debate curbs on payday loan companies

by Payday Loans

Welsh Assembly members have called for curbs on payday loan companies operating in Wales and some have made the comment that these companies “suck money” from poorer communities, pinpointing in particular the high interest rates routinely charged by these companies.

Assembly members have asked the Welsh Government to promote alternatives to payday loans like credit unions.

Members also expressed concern over the easy availability of short term loans, citing how fast it was to obtain them using a smart phone or via website. A motion in the assembly noting the “excessively high interest rates” received cross party support.

Member of Assembly Simon Thomas, of Plaid Cymru, said that it only took 20 minutes for him to find a loan for four hundred pounds which incurred an interest rate of over four thousand per cent. He said that this demonstrated how dangerous this sort of instant cash loan can be.

The Welsh government was urged to work with councils and voluntary groups to promote alternatives to payday loans.

Representatives of the short term and payday loans industry have said in response to the debate that their companies provide a much needed service to a segment of the community and do not deliberately target the poorest as has been claimed.

John Lamidey of the Consumer Finance Association was quoted as saying that the payday loans companies are helping people on variable incomes. “They are not the same as lenders who go from doorstep to doorstep” he said. He went on further to state that the typical customers of payday loans tend not to be people on the lowest incomes. They are more typically on middle incomes.

The Consumer Finance Association represents the majority of the payday loans companies. The Office of Fair Trading in a recent survey found that a quarter of customers taking out these small loans were earning between fifteen to nineteen thousand pounds a year, while nearly thirty percent are earning over twenty three thousand pounds a year.

The Citizen’s Advice Bureau said that while payday loans companies were an increasing concern, only a small percentage of those people going to their offices for advice on debt were taking out payday loans.
There will be an advertising campaign rolled out soon which will extol the virtues of credit unions, which are regarded as a safer option than payday loans.

News Payday Loans

Payday advance firms must not exploit customers, CEO says

by Payday Loans

The chief executive officer of one major payday advance firm has said that providers of instant cash loans must not exploit customers in financially dire straits, as doing so taints the image of the entire industry.

The chief executive, Gary Miller-Cheevers, remarked that responsible providers of payday loans have no desire whatsoever to make the lives of anyone in the UK worse off, especially those of students or lower income earners that are already struggling with debt. His words came on the heels of recent reports of loan providers seemingly targeting groups, such as students or the military.

Mr Miller-Cheevers called upon lenders to limit their activities to borrowers that have the ability to repay the loan without the risk of spiraling debt. There are enough of these genuine borrowers, he added, that payday lenders surely do not need to plumb the depths of whatever minority group they choose to trawl through in order to line their pockets with ill-gotten gains.

The chief executive also added that his lending firm is managed in a responsible manner, stating that it will only lend to those with full-time jobs. The firm also restricts its lending to a level that would be affordable to repay according to the borrower’s pay rate, Mr Miller-Cheevers also said, commenting that even with all these safeguards in place, his firm still declines as much as 90 per cent of loan applications.

In addition to his recent words condemning the practices of shady lenders that prey on the less fortunate or less financially savvy, Mr Miller-Cheevers has also stepped forward to voice his support for MPs who have called for short term borrowing interest rate caps as well.

News Payday Loans

Zombie debt scarier than any 18+ flick

by Payday Loans

Now here is a scary figure and is perhaps why payday loans have become such a necessity in the fallout of boom-time house prices and the subsequent credit crunch: one in six of the debtors surveyed in the R3′s recent snapshot of UK borrowing are zombie-debtors.

That’s roughly seventeen percent of people in debt only having enough money to pay off the interest on their loans, store cards and credit cards and never actually impacting upon the amount they owe. What has some bodies worried is that the minimum payment is never quite enough to cover the actual interest so, instead of people actually clearing their debt by paying the least that they are contracted to, they are sinking further into debt, rather than getting out of it. With budgets that tight, it’s no wonder payday loans – often where no credit check is needed – are the only way that people who’ve spent up to their limits in the past can actually have a life. Hence, we have the term ‘zombie debt‘.

There are, as you would expect, two sides to the argument as to whether the actual consumers who’ve taken out payday loans vindicate the service the lenders provide, or not.

On the against side, which is the view Consumer Focus lent towards, the payday sector of the lending market are accused of having had opportunities to reform their practises to stop customers falling into ‘debt traps‘ yet have shown no evidence of doing so. The actual R3 report also suggested that more than two thirds of payday loan customers had turned to the sector as obtaining credit elsewhere was not an option. Consumer Focus also expressed concerns for vulnerable customers who were at the mercy of short term lenders who were being perceived as ‘flouting the rules’. That was not specifically represented by the R3 report, although they did concede that payday loans were ‘not the best way’ to tackle long-term debt problems.

In defence of the sector, the Consumer Finance Association who, along with the Office of Fair Trading, regulate and monitor all payday loan institutions, presented completely different findings altogether.

In contradiction to the sixty percent of customers in the R3 report who it is alleged regretted taking out payday loans, a recent survey by the CFA found that 94% of those questioned were happy with the service they had received after taking out bad credit loans in this manner.

They were also quick to act upon misleading advertising by Wonga at the turn of the year when they were, rightly or wrongly, accused of targeting students with one of their online marketing campaigns. The OFT objected, Wonga apologised and capitulated, end of story.

And with regards to practises, the payday lenders could not be found at fault by another OFT investigation and were abiding by the terms and conditions the sector set out which are governed by the FSA.

In conclusion, it is safe to say that any survey can be created in such a manner that it will produce the answers the questionnaire’s sponsors are looking to find (the people who designed them would not be hired again, otherwise – the ‘Food Pyramid’ is perhaps the best-known example).

It is also safe to say that, providing payday loans are used for their purpose and repaid on the agreed date, they can often be a cheaper alternative than missing a credit card payment or slipping into unauthorised overdraft lending, yet are not recommended for long-term debt issues. Guess that’s why they’re called ‘payday loans’, eh?

News Payday Loans

Finnish payday loans company set for record U.K. growth in 2012

by Payday Loans

The CEO of payday loans company Ferratum, which is majority owned by the Finnish based Jokela company, said that they were expecting massive growth in 2012 based on their 100% growth in customer numbers in 2011.

Jokela said, in an interview with Reuters, that many people did not want to get involved in taking out big loans. He claimed that these led them into debt much more readily than the small loans which Ferratum specialised in.

Several thousand new customers took advantage of Ferratum’s short term loans in the lead up to Christmas last year so that they could buy presents for their family and friends.

Ferratum is destined for rapid growth over the next few years with a target of ten million customers on five continents by 2014, with Europe remaining its core market sector.

Ferratum only started payday loans operations in Britain in July 2011, but already has just less than one hundred thousand customers and has been experiencing double digit profit returns.

The short term loan industry as a whole has seen the benefits of the economic slump deliver them a large market share as millions of Britons have turned to the burgeoning numbers of payday loans companies for a quick fix loan of several hundred pounds at most intended to tide them over until their next pay check goes in the bank. These customers have often been refused a loan by the bigger financial institutions, like banks, because they consider their ability to pay back the loans as being too risky.

Jokela’s CEO, Jorma Jokela, said that concerns about the tendency for payday loans companies to drive low income and vulnerable people further into debt were overrated and commented further that Ferratum’s customers were all employed and were only taking out small loans. He claimed that much of the problem causing rising indebtedness was an inability to cope with much larger loans such as those associated with credit cards.

Ferratum charges a range of interest rates from 300% at the lower end to 3000% at the upper end with a maximum loan in Britain set at ₤350. The loans in the rest of Europe range up to a maximum of €600 (₤500).

News Payday Loans

Is there no alternative to payday loans?

by Payday Loans

A report has just been released into the financial activities of the British public and makes interesting reading. The report is one that is based on a regular survey by the Association of Business Recovery Professionals. The association is a trade body which serves lawyers and other professionals that specialise in bankruptcy cases. The report has an interesting section on the growing importance of payday loans in Britain.

The survey was one of the first comprehensive analyses of how and why customers in this country are using payday loans and short term personal loans in general and is of interest in the U.S. as well, where there has been considerable debate about the effects of the industry on insolvency. In contrast with the U.S., these short term loans have only been available in Britain relatively recently.

The findings of the survey are outlined below.

• 39% of the surveyed population claimed that credit card debt was their main concern and was also the main reason that they took out online loans.

• 70% of the surveyed population said that they were unable to secure short term credit advances anywhere else but through a payday loan company.

• Two thirds of those interviewed stated that they were able to pay back their loans by the due date.

• A third of the surveyed population said that taking out an additional short term loan made it even more difficult to balance the books while the remainder said it did actually help them to get by until their next pay day or salary adjustment.

• Of the number surveyed, 7% said that they expected to take out a short term loan or paycheck loan in the next six months.

• A half of the survey said that payday loans were easier to get than any other form of loan.

The survey definitely demonstrated the demand for short term loans or instant cash loans in the country with 3.5 million, i.e. 7%, likely to take one out in the next six months or so. It also appears that the majority of such users of short term loans have made the attempt to take out more conventional loans and have been unable to do so successfully.

News Payday Loans

Be careful with lending, says free debt advice service

by Payday Loans

One free debt advice service in Northumberland has warned people to be careful with their lending activity, urging them against taking out instant cash loans if they cannot afford to repay them easily.

Approximately 3.5 million Brits may end up choosing to take out payday loans and other forms of short term lending over the next six months as they recover from overzealous spending in the run up to the festive season, estimates suggest. However, Dawn Advice has said that if you’re already in debt, taking out another loan could only result in more serious problems down the road.

Liz Chadwick, chief executive for the debt advice service, remarked that as the chickens come home to roost in the aftermath of Christmas, January has always been a financially difficult month for Brits. Store card and credit card bills begin arriving in the post, Ms Chadwick said, and many households find their finances stretched to the breaking point by the end of January.

This can make turning to a payday advance provider an attractive option, as these providers of short term loans are experts in helping Brits out when they’re in a financial bind. However, while payday lenders can and do offer a valuable and much-needed service when it comes to a quick infusion of emergency cash, Ms Chadwick said that they may not be the best solution for every British household’s financial situation.

Payday loans are indeed ideal for helping to pay for an unforeseen expense that you could otherwise pay for if only you weren’t caught out between pay cheques, but if you’re already in debt, taking out one of these loans is at best a temporary measure and at worst will only make matters worse, experts say.

News Payday Loans

Thousands of people forced to turn to payday loans to keep a roof over their head

by Payday Loans

It is estimated that nearly two percent of the Scottish population – several hundred thousand people – are using payday loan companies to help pay the rent or mortgage payments and sinking further into debt as a result.

The figures were provided by the Scottish branch of Shelter, the organisation which campaigns for the homeless, which is worried about the growing dependence of the population on the short term loan industry and the implications for indebtedness on the chance that more and people could lose their homes.

Gordon McRae, a Shelter spokesman said that most people turned to the loan companies because they needed a quick fix, but the extremely high interest rates charged by the companies meant that it was very hard for many to pay them off by the date due.

It is thought that up to a million people across the U.K. as a whole are resorting to borrowing instant cash loans to get them through an immediate cash flow problem, while five million or more use credit cards or an overdraft to keep their heads above water.

An independent member of the Scottish parliament is now turning her focus on Westminster to try and get tougher laws against payday loan companies as she has been told that the regional Parliament is unable to legislate on debt.

Mrs Margo MacDonald says that she feels that Westminster is approaching a position where they are more likely to act on the matter. Meanwhile, Mike Dailly at the Govan Law Centre has told Mrs MacDonald not to give up with the Scottish Parliament as he thinks that it will take years for Westminster to bring in much needed legislation.

Shelter’s YouGov survey had been commissioned to find out the true extent of indebtedness and homelessness across the country. Mr McRae said the results of the survey were “extremely worrying.” He said that millions of people across the country were struggling to hold on to their homes across the country and having to rsort to quick fix loans like those provided by the payday loans companies was just making things worse.

Shelter’s Scottish branch found out that there were over forty one thousand people regarded as homeless last year, including twenty two thousand children, which was an increase of 25% since 2001.

News Payday Loans

Brits rely on unsecured credit for housing, says research

by Payday Loans

Millions of Brits have come to rely on unsecured credit in order to meet the costs of their housing, according to new research findings from national charity Shelter.

The research survey, which was conducted by YouGov on behalf of Shelter, polled in excess of 4,000 adults in the UK, discovering that the equivalent of nearly 7 million Brits are relying on payday loans, credit cards, personal loans, or unauthorised overdrafts in order to pay their mortgage or rent. Out of this figure of 7 million, approximately one million have taken out instant cash loans from a payday lender, though some have cautioned against taking such steps on a regular basis.

Chief executive for Shelter, Campbell Robb, expressed shock at the research findings, adding that individuals who turn to short term loans to aid in paying the cost of their housing will soon find that doing so quickly becomes unsustainable, as doing so can swiftly lead to personal debt ballooning out of control, and can even lead to repossession or eviction. The final end result, Mr Robb cautioned, could be as dire as homelessness, and he urged that anyone currently relying on credit to aid in paying their mortgage or rent to seek the advice of a debt counselor.

In related news, Spain-based High Street bank Santander recently announced its unauthorised overdraft fees have been doubled. This means that, for many banking customers who rely on unauthorised overdrafts regularly in order to make ends meet, doing so has just become twice as expensive.

However, industry experts point out that in many cases it can be much more affordable to take out payday loans instead of relying on an unauthorised overdraft, as it can cost less to repay the loan as it can to pay the overdraft fees charged by your bank.

News Payday Loans

Cattles lose 1.4M clients documents

by Payday Loans

Although the disks containing the sensitive information went missing from Cattles offices Birstall office in West Yorkshire way back in November, the clients whose details were on the backup storsage – along with details of 18,000 members of its staff – have only been notified this year.

The losses affect two of the organisation’s lending arms, Welcome Finance, who used to specialise in loans for those with a poor credit history before it stopped taking on board new customers in 2009 and Shopacheck, who deal in door-to-door collections for cash advance loans, likewise for people who’ve had no luck in securing loans from the high street.

Door-to-door collection, but no letter for six weeks

Given the nature of Shopacheck’s business – collecting door to door – there can be no excuse for the letters being dated in December but only arriving in 2012 for its 800,000 clients. The other 600,000 Welcome clients have likewise only recently had their notifications that anything has been awry, even though it is reported that investigations began as soon as the tapes were discovered missing.

This apology by The Cattles Group has not prevented the industry watchdogs from starting an investigation into how so many records were lost and, presumably, why the clients have taken so long to be informed.

The letter received by Shopacheck’s customers couldn’t rule out the fact that any of the information may yet turn up in the hands of an entity that would look to use it for identity theft or any other form of misuse, although it did confirm to the customers that had been affected – new sign-ups between the Octobers of 2005-2010 inclusive – that they had seen no evidence yet that the data had been abused in any way, according to their managing director Mark Bardsley, and were taking massive strides to ensure that the missing personal information didn’t show up on any radar, failing them being able to retrieve it.

Payday loans are online and secure

Many payday loan sites, unlike the insecure manner expressed here, use secured online payment facilities. Their interests rates may be slightly higher than the 399.7%APR as is quoted by the BBC for the typical repayment rate charged by Shopacheck brand, but what price on security and not having a ‘collection agent’ appear on your doorstep, especially if you are unable to meet the payment? Rather a nasty letter from the bank than someone peering in through the peephole to see if you’re in, one would have thought.

If found guilty of a breach of the Data Protection Act, The Information Commissioner’s Office can impose a fine of up to £500,000; according to their spokesperson, they will investigate the ‘alleged’ breach of the Act and then, and only then, will they decide if there is a course of action to take and what the severity of that action will be.

News Payday Loans

Take out payday loans for the right reasons

by Payday Loans

Industry experts say that while payday loans can be an incredibly useful tool for making ends meet from time to time, borrowers need to make sure they’re taking them out for the right reasons.

Payday advance lenders provide a much-needed service for those in need, especially for those Brits faced with an unexpected and crucial expense. This is where these short term loans shine, experts say, as they enable borrowers to not have to neglect their normal monthly bills in order to cope with a sudden eventuality.

However, problems arise when borrowers take out loans from payday lenders that they cannot afford to repay. Payday loans are designed to be taken up with a minimum of inconvenience, with the unfortunate collateral result that many people who are already deep in debt are taking out loans they cannot repay, thus sinking them even further into unmanageable debt.

The problem lies in those Brits trying to live beyond their means, debt experts say. In the current economic landscape in the UK, you don’t need to look hard and long for a household that’s been affected, yet some individuals have decided to maintain their spending lifestyles instead of simply make do by making cutbacks.

Doing so is always a mistake, experts say, but in an era of rising inflation, jobs losses, and pay freezes, this becomes unsustainable that much more swiftly. People need to understand the consequences of their actions, but many seem to not think much further ahead than taking out a loan of a few hundred pounds for a night out.

News Payday Loans

EU to close down rogue payday loan companies

by Payday Loans

The European Union has said that it will close down payday loan companies operating in the UK that do not obey rules on consumer standards. Apparently a survey has discovered that eighty percent of companies offering short term payday loans over the internet in this country are flouting information provision requirements.

The inquiry by the EU focused on personal loan companies and credit card companies. However, a website that has been set up by a former victim of payday loans Steve Parry has claimed that there are a large number of companies in this country that do not declare sufficient information about borrowing criteria on their sites.

The site, known as saynotopaydayloans.co.uk, has also reported a short term loan lender to the Office of Fair Trading for not having a valid licence. The payday loan company’s licence had apparently expired in December 2010.

Parry described some of the deficiencies of some of these companies, who were offering anything from no credit check loans and same day loans to instant cash loans but without advertising their contact details on their online sites or even mentioning representative APR’s. Some of the supposedly advertised payday loan companies are not actually lenders themselves but are actually brokers who act as ago between the payday loan borrower and the lender company itself.

The EU Consumer Credit Directive requires all short term loan companies to clearly state the cost of their loans and the borrowing period. In one quick survey of what is available easily online, the Independent newspaper reported that there were literally hundreds of payday loan companies available with a only a minority conforming to EU guidelines.

The Independent attempted to contact one of the companies named by Steve Parry’s website but was unable to do so. Parry says that the area of payday loans in Britain was an “absolute minefield” which was “full of deceit and bad practice.”

European finance authorities have apparently been asked by the EU to investigate the culprits and close them down by the autumn this year. It has also promised to make public a list of all companies not obeying the rules in order to publicly shame them.

News Payday Loans

Payday loan companies see Britain as pot of gold at the end of the rainbow

by Payday Loans

Shelter, the organisation which campaigns on behalf of the homeless, has estimated that nearly one million Britons have taken out a payday loan at least once in the last twelve months to pay for urgent bills and the number of instant cash loans and no credit check loan companies just seems to grow exponentially.

Shelter’s chief executive, Campbell Robb, said that taking out one of these loans can be very appealing to anybody who is in a desperate need to cover their expenses until the next time they get paid. The payday loan companies offer anything from bad credit loans to same day loans but can be anything but a short term fix to people’s indebtedness.

If the debt is not repaid quickly together with the often exorbitant interest required, then the situation can deteriorate very quickly, leading to evictions and homelessness.

The Shelter boss said that the number of people in the position of losing their home had reached nightmare proportions with a new situation arising every two minutes. Mr Robb urged anybody in the position of having to look for instant credit fixes to pay off their mortgage or rent to look for advice as soon as possible.

The organisation revealed that nearly seven million Britons used credit to help pay off urgent bills which included rent, mortgage repayments and credit card debt. These people were turning to the payday loan companies to help find short term loans, resulting in taking on further debt to try and pay off other debt.

A spokesman from MoneySavingExpert.com, Martin Lewis said that many of the world’s payday loan companies had been chased out of other countries because of stiff regulation. They had incurred the wrath of governments overseas because of the often absurdly high APR rates that they charged, reaching up to 4000%. Britain was seen as the pot of gold at the end of the rainbow for these companies because of the lack of regulation practised here.

The fact that many, though not all of these companies promise no credit check loans further increases the chances of people who have had a history of being unable to cope with regular payments for general living being driven even further into debt.

The advice for anybody who is thinking of approaching a payday loan company for a quick loan to think again and seek advice from a not-for-profit professional body.

News Payday Loans

Payday lender slammed for irresponsible practices

by Payday Loans

Another provider of instant cash loans in the UK was slammed for irresponsible practices recently once it was discovered that its website had statements encouraging students to use payday loans to pay for nights out or alcohol, industry watchdogs recently reported.

The firm quickly changed its tune once the discovery was made public, according to an article appearing in the Independent. The short term loans provider wasted no time in removing the articles in question from its website, claiming that it was not its intention to actively target students by encouraging irresponsible borrowing.

Reputable payday lenders were quick to condemn the firm’s actions, as they remarked that payday loans were excellent sources of quick funds in the event of a financial emergency, and that they should not be abused in order to finance a night out. Doing so could lead student borrowers down a dark path of unmanageable debt, experts said.

One of the articles posted on the firm’s website advertised its loan services by claiming that they were ideal for things such as purchasing presents for others and new clothes or for going out or buying alcohol. This prompted the Consumer Credit Counselling Service’s Una Farrell to refer to these articles as ‘reprehensible,’ and her sentiment was echoed by many other debt counselling professionals as well.

The content, firm bosses say, was never intended to encourage irresponsible borrowing in students. The solitary goal of the article was to be used for the site’s search engine optimisation efforts in order to drive search engine rankings, the lender added.

News Payday Loans

Scottish MP calls for action against high interest payday loan companies

by Payday Loans

One of the members of the Scottish Parliament, Margaret Burgess, has spoke up in a Parliamentary sitting in support of a motion she tabled demanding action against what she regards as socially damaging payday loan companies.

Ms Irvine, the MSP for Irvine, was taking part in a debate in the Scottish Parliament which had been called to discuss her motion. The motion had already received support from a cross section of parties in the Parliament. She said that many payday loan companies were demanding very high interest rates – up to 4000% was quoted – with the companies taking advantage of the misfortunes of people across Scotland.

Ms Irvine explained to the Parliament the mechanism of the payday loan principle, whereby those who had agreed to the conditions of cash loans or supposed short term loans by allowing access to their bank accounts. The terms and conditions of the loans required authorisation to be able to make withdrawals form the borrower’s account.

The amount borrowed normally had to be paid back in full, which means the amount borrowed plus the interest on the next pay day. Ms Irvine thought that the loan soon turned into a simple way to access somebody’s bank account and take out money.

The MSP used to work as a manager of a citizen’s advice bureau, so presumably had had plenty of first hand experience of people who had got into difficulties with instant cash loans and short term loans given out by these companies.

She went on to explain that many people who took out this type of loan never managed to get out of debt because their original debt simply got rolled over to the next pay day. In fact, rather than borrowing their way out of trouble, they were digging themselves further and further into a debt hole.

She thought that the whole payday loan industry should be monitored and regulated more effectively by the UK government and other options to borrowers who were experiencing short term financial problems should be explained more obviously.

Her advice to those people who were contemplating taking out a payday loan was to avoid doing so and think of the other options which were available.

News Payday Loans

Payday loans – a cause of consternation or absolute lifeline?

by Payday Loans

Experts who analyse the lending market have grave fears for householders who, fearing their credit rating is low, are turning to online payday loan providers, short-term loan specialists advertising their product on TV and in magazines and a range of high street outlets who advertise instant cash loans, providing they can prove their income.

Charity organisations and consumer analysts have also expressed their fears about the pull, the attraction, that having the ‘no credit check loans’ sign has over people who have poor credit history. It is ironic that they are the market being most lured to this ‘easy way out’ when they are the precise people who should be steering well clear of going further into debt than they already are.

However, when the Office of Fair Trading were asked to investigate the practise of payday loan services in 2010, the results contradicted current fears, stating that they were a ‘legitimate and useful’ institution that served a purpose for those who needed money but were being refused by traditional lenders due to their careful lending policies, rejecting anyone seen as a risk without question. It is perhaps from these practises that payday lending has blossomed in recent months and is often a first port of call for those who still believe that banks and building societies will not even consider their applications.

In a recent report, the BBC outlined the payday loan process from start to finish, based on the findings of the OFT investigation. In this two-part article, we look at their interpretation of the report and how that affects the consumer in an economic climate that has improved little since the results of the OFT report were published.

What’s a payday loan and how do they work?

High Street cash-advances can vary slightly to those provided by online payday loan providers. In the case of a high street loan, it is usual to provide a cheque dated on or around the day that you expect to have the funds available; the repayment amount will be agreed depending upon how far in advance that date is and the amount you want to borrow. You may have to provide the last three months’ most recent pay-slips and proof of your identity and address.

An online payday loan is just as simple a process. You approach a lender by filling out a form providing your bank details and the amount you want to lend. You will know how much you have to repay in advance by their advertised rates or, the current fashion is the use of a ‘slider’, which you move until you’re happy with the repayment and the date. The lender will then confirm your eligibility through whatever their chosen validation method is and that you have a regular income that can meet the repayment on the date you set out on the online form, based on that information. The money you have asked to lend is usually in your account within 24 hours.

Read more [...]

News Payday Loans

No credit checks on payday loans….what’s the catch?

by Payday Loans

It seems as if some Britons’ appetite for credit is all consuming, even when the warning bells started to jingle in early 2007, then exploded into a cacophony of sound over the next two years. You would have thought that we would have all learnt our lesson.

Most people who want a short term payday loan these days have to go through extensive credit checks to make sure they are capable of paying the loan back. And fair enough too, one might think, with the western world’s finances a bit of a doleful mess, all due partly to people being given easy credit without the wherewithal to pay most of it back.

However, up pops a new pay day loan company that is promising to feed the appetite of those who just can’t seem to say no. To be honest getting a pay day loan seems easy at first sight. There are plenty of them online and all it seems as if you have to do is to just make an application online get the loan paid into your bank account and then you can pay the bills for a few days more.

The new company, called MyNoCreditCheckPaydaLoans.co.uk, which is certainly a bit of a mouthful, offers to provide payday loans to people over eighteen without the extensive credit card checking that other companies insist on, hence the name.

The company apparently not only aims to provide loans simply and safely, but also dishes out useful advice for people who have had a reputation for bad credit loans. Presumably the advice is not that they should not take out another loan until they have paid off the old ones, but that they can obtain a loan with MyNoCreditCheckPaydaLoans without worries.

The company provides payday loans on a short term basis only and the company says that it feels that those who need a loan but have a bad credit card rating or have had problems in the past obtaining and paying back short term loans should not be disadvantaged when they want to keep their car repayments or pay off the gas bill.

The payday loan company says that the only two stipulations needed in obtaining a loan are that one is over eighteen and have a steady income. One applies online and fills in all the usual details including one’s bank account.

News Payday Loans

OFT cracking down on dubious payday lenders methods

by Payday Loans

The Office of Fair Trading is cracking down on payday loans companies using the Internet to flout laws and guidelines, designed to protect the customers they are attracting, by using dubious advertising about the affordability of their products, especially in respect to the charges and methods of payback that the short-term loan companies operate.

New customers who are not altogether clear about what’s expected of them when they apply for quick cash loans through the direct advertising campaigns, which in some instances has seen ‘calls to action’ being sent to their mobiles as SMS messages, are finding themselves with charges or repayments that were way over and above what was represented on screen.

The punishment for the loan companies can be as severe as having their consumer credit licenses revoked if they cannot prove they are able to change the manner in which they operate.

Although they have not been named, it is believed that fifty payday loan companies are having their websites checked for misleading advertising which not only do their best to hide the charges but do not explain the lengths the cash advance lenders will go to to get their money back on the agreed date, which you have to agree to in order to be eligible for the loan.

Complaints to Consumer Direct more than doubled in 2011

An investigation into the amount of complaints arising from such activities was presented to MPs shortly before Christmas, which saw disgruntled customers complaints about online loan specialists rise from 700 in total in 2010 to over 1,500 by November of 2011; with the industry reputedly worth £2bn per annum, that figure is still comparatively small.

Practises need tightening up or outlining more clearly by payday loan organisations.

Some of the more worrying aspects of the way repayments are collected, such as being able to draw money from a client’s account even if they are already over their arranged overdraft limit, are also to be looked into. Roll-over loans, which, if not curbed, can result in real financial difficulty for the individual who gets reliant on the quick cash injection before realising it’s a never ending spiral of debt, will also come under scrutiny.

The practise of offering to show potential customers their credit score if they take out a loan is also on the agenda. One company who charged £60 for the privilege but did not state the charge at the time of enquiry has been told to get its act together or face further action, which could possibly mean their credit license as a payday loan lender could be stripped if they fail to do so.

News Payday Loans

Mom forever indebted to son’s payday loan

by Payday Loans

We all, from time to time, touch our parents for a few quid. I’m just in my forties and have only very recently got out of the habit. Now it’s my turn as, yesterday, I withdrew a cool ton for my stepson who ‘neeeeded’ the money to buy new tools for the apprenticeship he’s recently started. Fair play, I suppose, when you think that my cash advances from the bank of ‘Dad’ (still unrepaid) used to be for Stella Artois or Golden Virginia at the end of a heavy month.

However, my touches are nothing in comparison to one 27 year old son who took his mother for over £1,000 in all to repay his payday loan addiction – and never even told her! This article serves as a warning to any parent who commits to paying off their offspring’s debts with their own credit card.

In spring of 2011, the mom, who has remained nameless to protect her family, was approached by her son who had ran up outstanding debts from several payday advances; now that the lenders wanted their money back and he was all out of options, he asked his mom for the money.

Finding the cash wasn’t the issue, it was the deliberation of whether she should or not that was giving her consternation. Reading between the lines, I can almost here her saying to her son when she agreed to pay of the first loan (you just know what’s coming, don’t you?), “Now you promise me you won’t get into this trouble again!”, to which the son no doubt duly promised, honourably or not.

And, for a while, ‘mom’ heard nothing, indeed forgot about the whole event. She had repaid the payday loan – to Wonga, as it happens – on her debit card, and that was that, as far as she was concerned.

That was until she came to look at her bank staement towards the end of last year. Not only had her son took out loans with Wonga again, but on multiple occasions, and as much as £400 in one hit. The total that the payday loan specialist had taken from ‘mom’s debit card since the initial debt repayment had risen to almost £1,000!

What ‘mom’ had not realised was that when she had repaid the initial short term loan that her son had come cap in hand to her for, by using her debit card she had triggered an automatic registration to pay off all future debts against the account.

To be fair to the payday lender, it is all in the t & c’s and Wonga, after ‘mom’ had written and complained that it was not her debt but her sons, apologised and said that it had assumed the card belonged to the debtor as it was registered at the same address. Mmm – a bit six of one, half a dozen of the other, if you ask me.

All’s well that ends well, as they say. Upon receipt of the complaint, Wonga automatically suspended her son’s account and, fair play, returned the money to ‘mom’. Legally speaking, they may or may not have had to do that.

However, in the light of other stories shedding not such a glorious light on the cash advance company (again, not that Wonga were 100% to blame, there – the students lending the money are, after all, supposedly learned subjects), they have credited ‘mom’ with the sums not authorised by her and have come to an arrangement with ‘son’ to repay the debt in bite-size chunks, rather than the lump sum as was originally agreed when he first took out the payday loans. Let’s just see what happens when he defaults on one of those payments, before showering Wonga with plaudits, eh?

News Payday Loans

A good enough reason for a payday loan?

by Payday Loans

Payday loans are, in a lot of instances, almost guaranteed if you are able to prove that you can repay them on the due date. There are reasons for taking out pay day loans, some justifiable, others not so.

Above everything, when you take out payday loans online, you have to remember that the following month, whatever you lend this month you are going to be short – and a bit!

Most online loans are easily accessible, 24/7. You rarely have to speak to anyone, as once you submit your details via the online form your application will be assessed by the quick cash lender; the next thing you know, if you’re online loan application has been accepted, is when the cash hits your bank account.

No news is good news

The difference with this type of short term credit is that, unlike when you apply for a loan on the high street, there is no advisor to point you on the road to financial recovery.

The proviso is,

you need money,
they’ve got it,
you can pay it back,
they lend it.

There is no consideration taken into your long- or mid-term ability to put your finances in order; you are responsible for paying it back and coping with the fact that you will have a hole in your next salary cheque where you’ve paid off the balance.

Living to work, not working to live

This type of short-term cash advance does have a place in today’s society. More and more households are finding it difficult stretching their money a whole month, without cutting back to the bare minimum to survive.

When you are on such a budget, the injection of cash can prove a massive relief during the time its floating around the house. But, when that extra’s gone and it’s back to the treadmill without that financial cushion, you have to make sure that there is room in your budget to accommodate the extra for the repayment.

Justifiable reasons for a payday loan

There are, of course, extenuating circumstances where a payday cash advance is a lifeline that you would drown without.

If, for instance, you know that you are going to go over your overdraft limit very early on in the month, it can actually work out cheaper to take out a payday loan.

There are also household emergencies that need addressing which, under normal circumstances, you would be unable to settle financially. At this time of year, a boiler repair (if you’ve dropped your homecare cover to save a few quid on the monthly outgoings) is absolutely essential if it fails to fire up. And if getting to work without your car is impossible and it breaks down, that is another instance where payday loans prove their worth ten-fold.

Payday loans serve a purpose, but should be used as and when necessary. In order to get the cheapest payday loan, do check who has the best rate to suit your purpose by starting with our hand-picked payday loans specialists.

News Payday Loans

Use no credit check payday loans in an emergency

by Payday Loans

When the family car suddenly gives up the ghost or a a major household appliance goes on the blink but your next pay cheque is weeks away, industry experts say you may want to consider turning to a provider of no credit check payday loans to help you through the emergency.

The best laid plans of mice and men oft go awry, as the poet said, and it’s only a matter of time before you end up between a rock and a hard place. When a financial emergency rears its ugly head and you find yourself wishing that you weren’t weeks away from your next payday, you should consider turning to a lender that can provide you with instant cash loans to get you back on track.

Payday loans are designed to be repaid in as little as a few days to as long as a few weeks, and are ideal for situations where you’re caught out by a sudden expenditure that you couldn’t possibly have prepared for. For a small fee – usually around £10-£25 per £100 borrowed, depending on the lender – you can get as much or as little as you need to get you through to your next pay cheque.

Taking out such a loan can actually be less expensive than availing yourself of other options, such as an unauthorised overdraft on your current account. Many banking providers charge their customers punitive fees for going into the red, and the cost of repaying these charges and fees can lead to serious debt problems in the future.

Payday loans are also much easier to take out than loans from traditional lenders. This is because the lion’s share of payday lenders do not require customers to submit to a credit check; as long as you have a bank account and a steady job, you’ll be approved for your loan, and repayment is a snap, as lenders can debit your account directly on the date that your loan comes due.

News Payday Loans

Don’t lecture us – we know we got it Wonga

by Payday Loans

On the back of loans of up to 4,214% APR, Wonga have been forced to withdraw short-term loans it was offering to students.

In light of this indiscretion, the payday loan company has removed any reference to the cash advance loans offered on its website after it was labelled “incredibly irresponsible”.

However, the online payday loans organisation has not U-turned completely, confirming that it would still be assessing applications for short-term loans by students that could confirm they were in employment as well as studying.

Despite official research indicating that a payday loan of this nature could actually prove useful to graduates in this situation, the National Union of Students have refused to accept that this could be a good thing for anyone in education, whatever level.

The original article which attracted students to apply for instant cash loans at the astonishing interest rate were, as it turns out, misconstrued as the scripts were actually written to satisfy website crawlers and get Wonga to the top of the search engine pages, rather than for humans.

The fact that substance and content was sacrificed for page ranking – well, you have to be a writer for the Internet to understand how happy it makes one to see someone finally get their comeuppance for employing people who have only a limited grasp of English but are cheap. It’s about time, and perhaps that will be a lesson to other big institutes who outsource this work to foreign climes to stop, not that we imply that this was the case, in this instance.

What price can a growing organisation like Wonga place on reputation? Especially in a marketplace as competitive as payday loans, where there are thousands of companies promising to offer loans for bad credit or instant cash loans that can be in your bank account within 24 hours, often sooner.

It has cost them a lot more, one suspects, for this slight than it would have had it employed competence in either copy-editing or proofreading in the first place, whichever one was at fault, if not both.

The payday loan company, whose advert inadvisably could have been understood as encouraging students to live beyond their means, admitted that the article no longer had a place on its site as it “gave rise to misunderstandings.”

News Payday Loans

Richest go credit check free

by Payday Loans

I don’t know about you, but my formative years were spent growing up the last time we had a Tory government of any renown. At that time, Paul Weller was, with the help of the likes of Simply Red and Billy Bragg to name a couple, devout on bringing down that government through top-notch music and targeted lyricism, with titles like: Walls come tumbling down, A Town Call Malice, Funeral Pyre and Money’s Too Tight To Mention from the flame-haired Manc and his gang.

Even Gwen Guthrie got in on the act, spelling it out loud and clear: “there ain’t nothing going on but the rent – you’ve got to have a j-o-b if you wanna be with me.” Mmm, that second line should be a slogan for one of the many online payday loan specialists out there, eh?

It seems that, getting on for thirty years since Funeral Pyre got to number four with that haunting video and the refrain “the rich get rich and the strong grow stronger-errr” (oh, Rick Buckler’s drumming – sublime), the cycle of those in power are, once again, looking after the wealthy and leaving the poor to “…cut down on beer or the kid’s new gear? It’s a big decision…” with the announcement that, even though us mere mortals looking for a quick loan could be subject to any manner of credit check, those who earn a set amount or who have assets totalling ‘x’ are to be exempt from such invasions of their privacy.

Those are the proposals put forward by the FSA, anyway, following two years of head-bashing investigating the lending market, aimed at shoring up the UK mortgage market which has been identified as one of the criteria for imbalances in the books during the economic crisis.

So, if I’m reading that correctly, your average working man looking for a quick payday loan of say, £400, to stretch until his next pay-cheque arrives, will be subject to existing scrutiny and his affordability into repaying the online payday cash advance. However, if someone who earns *£1M+ per annum or has *£3M+ in assets (*the figures being put forward for approval under the new terms proposed by the FSA), they have the option to “opt out” of a background search into their finances?

Hang on just a second. Which of these two could potentially damage the fragile infrastructure of our economy more? The chap, though working every hour, defaults on a £400 payday loan?

Or the multi-millionaire who has all of his share-value wiped out in a stock market crash of epic proportions over night because someone at a soiree has told him to put his shirt on the next big capital investment which fails abysmally? Thus rendering the gent bankrupt, owing, not only the couple of mill he lent against his mortgage, but also any other possible creditors too! You tell me.

Perhaps your typical multi-millionaire may not be searching online for a payday loan, but he could be, just to tide him over knowing that one of his funds is about to mature to settle the short term loan in one fell swoop.

The other news from the report is that banks are still taking into consideration bonuses, when it comes to lending criteria, to contribute to your total salary. Many of us mere working men could do ourselves a favour, if we know we have a bonus coming up, as a result of the year-end figures just being released or through a performance-related reward.

Sometimes, interests rates can seem comparatively high, but if you’re skint after Christmas but know you’ve got a bonus on the way, it could cushion the blow of the repayment on the payday loan to last you the next couple of weeks until you’re paid, again. At least then you will have, as Paul Weller once confessed, “…got a pocket full of pretty green.” to last you until the next elusive payday.

(Yes, you do have to be old enough to remember one pound notes for that one, thanks for reminding me!)

News Payday Loans

Brits facing ‘Christmas debt hangover’ turn to payday loans

by Payday Loans

Brits facing a ‘Christmas debt hangover’ after the festive season are considering turning to payday loans in increasing numbers, industry experts recently reported.

There are many benefits to taking out no credit check loans from a payday lender if you find yourself temporarily short on cash. Short term loans are especially designed to help get you through the financial doldrums until your next pay cheque, provided you can afford the small fee.

However, financial experts warn that you need to make sure you have the ability to repay the loan at the end of the term, as interest payments can rise quickly for borrowers who neglect to repay on schedule. This warning has hopefully been heeded by those taking out payday loans in the run-up to the festive season, as the number of Brits applying for the loans increased by a factor of four in comparison to November’s figures.

One payday advance lending industry leader remarked that the lion’s share of its applicants are between 18 to 35 years of age. Women seen to be more likely to apply than men, with more than three out of five of the lender’s customers being reported as female.

However, some borrowers may be using payday loans not to pay for essentials in financial emergencies but instead to finance things like nights out or shopping trips, according to the Debt Advice Foundation. According to the industry body, 10 per cent of payday borrowers say that borrow not to meet needs but for things they wanted instead.

News Payday Loans

Payday loans can help to repair your bad credit rating

by Payday Loans

This seems an awfully tough concept to get your head around at first, but getting a payday loan to consolidate the minor misgivings in your outgoings can actually help to repair a poor credit history.

Getting heavily into debt through lending too much money on credit cards, re-mortgages and secured or unsecured loans, up until the last few years, has been something you could do in your sleep. Literally.

When everyone had to try desperately hard to get a bad credit rating, the moment you got close to your overdraft or credit card limit, your bank would write to tell you they’d increased it to the next threshold. Furthermore, you would be inundated for weeks by junk mail from other credit card providers to take out another card with them, even switch your existing debt with 0% interest for up to a year to entice you to burden them with your debt.

Funny, the doormat doesn’t seem so bothered by those loan and credit card offers much these days. It’s not very often now you see loans – even on short-term or payday loans – from lenders offering 0% interest.

Interest charges build up, seen and unseen

Whether it’s your mortgage or your overdraft, those little misdemeanours can soon start eating into money that would equate to your disposable income if you’d kept within the limits. Once you get to the point of no return, you’re never going to improve your credit rating or get out of the cycle of debt without a little hand up. A payday or short-term loan can often be that lift you’ve been looking for; many of them are available regardless of credit history or even without credit checks.

If you’re constantly living to the edge of your overdraft or often foregoing one repayment in favour of another, willing to pay the £5.00/day interest that you’re short at the end of the month, you may not feel a massive dent in your monthly budget, but your credit rating is taking the hit month on month.

Families and households across the UK are strapped for cash, there’s no surprise in that statement. Every month, call centre staff hear the same old yarns as to why you can’t meet the full payment and, after they put the phone down after accepting your offer to repay the difference in installments, you notch up one small victory for yourself. In your mind’s eye, whilst bracing yourself for a few short months whilst you pay back the extra balance, you’re doing a little jig or punching the air.

But is it really a victory in the long term?

In the next article, I’ve got my own little story of debt, living on the edge (of my overdraft) and how payday loans make sense to tidy up your little shortcomings and may even pay for themselves, repairing your credit rating, as you go.

News Payday Loans

Payday loans avalanche effect?

by Payday Loans

The first payday loan can sort out many a problem, that’s what they’re there for. To tide you over with a bit of cash, especially in month’s like January where you may have been paid early or had extreme outgoings the previous month or even both.

But what is key to not getting in the same boat the very next month is to set a repayment factor that your budget can accomodate.

As payday loans become more popular, and more available, there is gathering evidence that suggests individuals are simply not doing just this. And what’s the next temptation, when you’ve over-stretched yourself? To get yet another payday advance or quick loan to cover the mounting debt.

Sure, that’s fine if you know that you’ve got a lump sum like a bonus on the way but, all too often if you’re not careful, this habit of acquiring short term loans can soon see you struggling to pay at least one, if not more, of the debts you’ve suddenly started to incur.

Is the economy suited to multiple payday loans?

Back in the day, there was only one way your salary was going to go, and that was upwards to at least match inflation or, if you were lucky or had pushed yourself, move up to a milestone raise, as and when it came around to appraisal time at the end of the financial year.

However, as businesses in the UK budget for 2012 and beyond, there seems to be no respite on the economic horizon. Confidence is low, pay freezes are all too common and, in some instances, firms are asking their employees to take pay cuts.

It certainly can make sense to take out a payday loan if the amount repayable is less than you would otherwise be charged by your bank for entering unauthorised overdraft limits but, before you enter into multiple agreements, it is worth considering your ability to repay, before you set your monthly repayment amount.

The onus to do this is entirely upon your shoulders, especially as there are loan companies who do not check your bad credit rating and issue sameday loans on the basis that you can prove your income based on history.

Consolidation payday loans

Industry watchdogs have already pre-empted this happening and, to some extent, have granted some of the higher rated loan companies the ability to offer consolidation payday loans, which take all of your existing short-term commitments and group them all together, in the hope that this will cut down on the monthly outgoings of individuals who find themselves in this situation in an attempt to make them solvent again. More on this topic in the next article, (7/1/12), ‘All is not lost’.

News Payday Loans

Payday loans help pay mortgages or the rent in 2011

by Payday Loans

Temporary credit such as unauthorised overdrafts or payday loans have aided one out of every seven Brits pay their mortgages or the rent in 2011, according to one housing and homeless charity.

Shelter, the charity who conducted the recent research study, has issued a warning that reliance on these temporary methods of getting quick loans could result in Brits becoming homeless. Shelter said that their research could mean that nearly seven million Brits across the country could be running into problems by relying on instant cash loans, urging them to seek help immediately before sinking into debt.
Around 2 per cent of Shelter’s research survey respondents indicated using at least one payday loan to pay their mortgage or rent in 2011, which equated to nearly one million Brits. However, these loans are designed to be used in the short term, which makes them quite unsuited for paying housing costs due to the relatively high interest rates some of these loans carry.

Shelter’s chief executive, Campbell Robb, called the findings ‘shocking’ in regards to the desperate struggle of millions of Brits to keep their home, especially when turning to the inherently unsustainable nature of shorter term credit such as overdrafts and payday loans. Debts can quickly snowball out of control, Mr Robb added, which could lead to repossessions, evictions, and, in truly dire circumstances, homelessness.”

Payday loans, experts say, provide a valuable service for people needing a bit of an extra boost in emergency situations while they’re in between pay cheques. However, using these loans to meet housing costs could be a sign that household finances are in shambles, and experts agree with Shelter in recommending anyone needing to rely on payday loans to keep a roof over their heads should seek aid immediately.

News Payday Loans

Payday loans – a better bargain than traditional lending

by Payday Loans

While it may seem that people are queueing up down the street to take issue with payday loans, the reality is that the cost of repaying instant cash loans can be much less expensive than relying upon traditional forms of credit.

Repaying cash loans from a payday lender can sometimes cost as much as £30 on every £100 borrowed on a monthly basis. While this would equate to an approximate 2,000 per cent APR, relying on an unauthorised overdraft from a high street lender can often be much more costly, with some banks charging as much as £200 on a £100 overdraft – resulting in an APR of over 800,000 per cent!

Net lending provided by traditional banking institutions is on the decline for a large number of Brits, as loans are now only being approved for consumers with spotless credit ratings, overdrafts are being withdrawn, and the limits on credit cards are being withdrawn. While many economic experts say that this rebalancing is sorely needed, in the event of a financial emergency it can be hard to pass up a 2,000 per cent payday loan when the only other option for many consumers is a 800,000 per cent overdraft charge.

Even though payday loans may be more affordable than reliance on an unauthorised overdraft, debt specialists still want to protect borrowers from spiralling debt levels. One such solution could be to limit the number of payday loans a borrower is permitted to take out in an given year, as a Consumer Focus report found in 2010, especially if people only make use of payday loans in emergency situations.

Another way to limit debt levels would be to scale back the overdraft charges issued by banks, experts say. However, traditional high street lenders argue against this, commenting that free banking hinges on these fees and charges.

News Payday Loans

Some payday advance lenders sending spam texts

by Payday Loans

According to one debt charity, a select number of payday advance lenders have begun to send spam texts to prospective customers.

The Consumer Credit Counselling Service has taken umbrage at the tactics of some providers of payday loans and debt management firms, asking consumers to share the spam texts they receive in an effort to shed light on what some call underhanded marketing techniques employed to capitalise on the needs of the financially vulnerable. These debt management firms have begun to bombard Brits with offers of ‘debt advice,’ leaving out the one niggling detail that these advising sessions carry a fee, experts say.s come at a price.

Some providers of instant cash loans are also beginning to market their services via spam texts. One example is a lender texting random recipients a loan offer that carries a £25 fee per £100 borrowed, with a 30 day term, yet the CCCS has voiced concerns that these texts may be causing harm because they are targeting those who are in dire financial straits, and have launched a Twitter campaign urging users to share these unsolicited texts through the social media website.

The debt charity said that it has estimated the number of financially vulnerable British households at in excess of 6.2 million, adding that the marketing techniques employed by a select number of these firms may be targeting just these low income households. CCCS representative, Matt Hartley, said that the coming year will be difficult enough for these families without fee-charging debt management firms sticking their foot in the door at every opportunity.

News Payday Loans

Charity calls for more regulation on the nation’s lenders

by Payday Loans

One charity has come out in favour of more governmental regulation on the nation’s payday loans providers and other lenders after a recent research study that 20 per cent of low income earning households in the UK could be spending as much as 30 per cent of their income on debt repayments.

Charity Barnardo’s says that some payday advance lenders may be exploiting poorer British households, and that some providers of credit that run rent-to-own schemes charge individuals substantially more to purchase appliances for their household over time than it would cost to purchase the same items outright on the high street. Anne Marie Carrie, chief executive for Barnardo’s, remarked that the lending industry was ‘morally bankrupt’ for luring society’s vulnerable families into the trap of unaffordable debt.

The charity’s new report exhorted the Office of Fair Trading to institute more stringent regulations regarding lenders running rent-to-own schemes. The OFT needs to compel these providers of quick loans to display sale prices equivalent to high street prices on their merchandise, Barnardo’s insisted.

The charity also stated that the Government needs to take greater steps to make sure the nation’s low income earning families have greater access to traditional finance in order to rely on loan sharks or rent-to-own schemes. Barnardo’s argued that these poorer households need to be encouraged to save up for essential goods and services instead of borrowing to pay for them.

One particularly damning example of this exploitative behaviour on the part of rent-to-own companies, said Barnardo’s, was a £430 Beko fridge-freezer available in Comet would cost £1,074 if purchased from BrightHouse, a rent-to-own company, over a payment scheme of three years.

News Payday Loans

Scottish Labour leader puts credit unions over payday loans

by Payday Loans

Johann Lamont, the Scottish Labour leader has recently come forward against payday loans and instead told people living in Scotland to resort to credit unions instead.

Scotland is in need of changing its debt relationships, said Mr Lamont, who claimed that too many people are resorting to payday advance firms in order to finance their Christmas spending, despite the vital service these lenders provide to the Scottish people. Instead, Scottish Labour recommended that households should steer clear of instant cash loans due to their high interest rate payments.

The party took issue with the high APR interest rates charged by payday lenders operating within Scotland. Meanwhile, with the government estimating that around 85,000 Scots borrow from illegal sources with interest rates as high as 10 million per cent, suddenly the 2,000 per cent APR average seems much less egregious.

The 2,000 per cent figure may seem exorbitantly high at first blush, but industry experts point out that an annualised rate like the APR is simply not consistent with the true cost of repayment when it comes to payday loans. This is because these loans are designed to be repaid in a very short period of time, and the APR is more suited to traditional long-term lending products.

Many question why payday lenders use such inherently misleading methods to publicise the interest rates they charge on their loans, feeling it the height of foolishness to draw the concentrated ire of politicians and interest groups down upon their heads. However, payday lenders – which are regulated by the UK government – are bound by law to use APR interest rates in all their documentation.

News Payday Loans

East Durham CAB seeks to block payday advance shop

by Payday Loans

The Citizens’ Advice Bureau for East Durham is looking to block the opening of a payday advance shop due to concerns over payday loans creating more debt for UK households already feeling the squeeze due to the current economy.

The CAB has raised objections to The Money Shop’s new planning application, which seeks to move into the Castle Dene Shopping Centre in Peterlee at the one-time site of an old Claire’s Accessories store. Also based in the shoppingcentre, the CAB has taken issue with the firm’s services, saying that the risk of rising debt due problems paying back instant cash loans is too great.

Neil Bradbury, chief executive for East Durham CAB, remarked that he believed people are not given any debt management aid when it comes to such initiatives but are actually moved from the frying pan into the fire. The charity was concerned by the number of credit shops springing up within Peterlee, Mr Bradbury also said, stating that their numbers are reaching ‘unsustainable’ levels.

Providers of payday loans are not the only firms to come under fire by the CAB, as the chief executive also said that the number of firms operating pawnbrokers and cash-for-gold purchasing schemes are also rising too rapidly. The number of debt problems that originated from or were exacerbated such situations have risen by 50 per cent over the past few months, Mr Bradbury also said.

The CAB chief executive did say that payday loans are useful in many situations, such as a financial emergency where a borrower needs immediate cash, yet is stuck between pay cheques. However, Mr Bradbury voiced concerns that Brits availing themselves of the services are not solving their financial problems and just using the loans to ‘push money around.’

News Payday Loans

Payday loan applications up fourfold, says lender

by Payday Loans

One major payday advance lender has recently said that it has experienced a fourfold increase in the number of people applying for payday loans over the last two weeks.

With the lion’s share of its borrowers between the ages of 18 and 35, the instant cash loans supplier said that approximately two million Brits have submitted applications for finance in one short fortnight. There seem to be no indications that the popularity of this form of credit will decline anytime soon, with industry experts predicting that for the first half of 2012, this figure will rise to more than 3.5 million.

The sales and marketing manager for the lender, Ian Porter, remarked that application levels have been incredibly high during the past month, with the last fourteen days doubly so. This trend cannot be seen as surprising, another expert said, as Christmas has traditionally been one of the most expensive times of the year, though the expert added that anyone considering taking out a loan should first make sure they have a bulletproof financial plan to make their repayments in a timely manner to avoid charges and fees.

In related news, the payday advance industry has been under fire recently for the high APR interest rates charged on their short term loans, with many calling the rates ‘exorbitant.’ However, these fees are quite often less expensive than paying an unauthorised overdraft for the same amount of cash, leading to many using the service provided by payday lenders as a cheaper alternative.

Other industry experts have said that using an APR interest rate to calculate interest for a short term payday advance is inherently misleading, as APRs are inaccurate when dealing with loans of only a few short weeks. However, the payday lending industry is bound by UK regulations to use APR rates in their documentation.

News Payday Loans

Be careful not to overstretch your finances over Christmas

by Payday Loans

Industry experts say you need to take care not to overstretch your finances over the Christmas season, warning people away from taking out payday loans if they will not be able to afford to repay them on time.

While providers of instant cash loans offer a crucial service to Brits caught out with an emergency in between pay cheques, experts say you should be wary of taking out such short term loans unless you know for a certainty that you can repay them on time. Much like any other form of lending, there are charges and fees for failing to repay the loan on time, and with so many Brits facing economic uncertainty, overspending on Christmas celebrations and gifts is an excellent way to end up in the red in the New Year.

This has led many experts, such Jim McKenzie from the Citizen’s Advice Bureau in Truro to caution against taking out short term lending if there is even a remote possibility that you may not be able to repay it. The pressure is turned up high to overspend during this time of year, said Mr McKenzie, especially for families that have young children that have been watching television adverts for all the newest games and toys that are on sale this Christmas season, which can lead many to overuse their debit and credit cards until it becomes difficult to make ends meet.

Unauthorised overdrafts on current accounts can become quite the expense for those Brits who slip into the red, leading many to choose payday loans as an alternative since the majority of these loans are actually less costly to repay in regards to interest. However, if you’ve already racked up so much debt that your next pay cheque is going straight out of your account, you won’t be able to repay the loan, leading to even higher debt once the fees and charges for neglecting timely repayment are levied against you.

A better solution would be to spend within your budget, said the CAB representative, even though this may lead to a Christmas that is slightly less merry than you would like. However, making such a sensible decision can lead to better financial stability in the new year.

News Payday Loans

3.5 million Brits expected to use payday loans by June 2012

by Payday Loans

Overspending on Christmas could result in a massive 3.5 million people in the UK taking out a payday loan in the next six months.

In the run up to the festive season, cash strapped Brits have been turning to short term loans like never before. These loans are designed to help tide people over until their next salary hits the bank, but if they are not paid off in time, the interest rates can be crippling.

The trade body representing insolvency professionals, R3, conducted a survey on the usage of payday advances in the UK. The company discovered that a lot of people take them out in order to pay back other debts. 60% of those who are desperate for money are women, primarily those in the 18 to 35 age bracket.

Worryingly, nearly 50% of those who have made use of a payday loan said it caused their financial position to deteriorate, while only 13% believed it actually helped them. The survey also found that there were an increasing number of “zombie debtors”; those who can only afford to pay off the interest and never reduce the amount they owe.

Frances Coulson, the president of R3, said it is not going to be possible to hang on each month. When interest rates rise, or circumstances change, this group will be left with few options.

In October this year, 60% of Brits were worried about their level of debt. In October 2010, that figure was just 39%. Regionally, 70% of those in the North East are worried about debt, compared to just 50% of those in the East.

The coalition is currently reviewing the payday loan industry but the results are not expected until the autumn of 2012. Will that be too late to stop some people descending into a lifetime of spiralling debt?

News Payday Loans

Insolvency body chairman wants OFT to reveal figures

by Payday Loans

One insolvency trade body regional chairman recently said that the Office of Fair Trading needs to reveal the figures of how man Brits are using payday loans to help get them through the month.

R3 regional chairman, Andrew Walker, remarked that a better way to avoid debt would be to educate consumers on financial management techniques instead of allowing them to resort to short term loans to get them to their next payday. According to a recently conducted research study by the insolvency trade body suggests that 3.5 million Brits may be considering instant cash loans over the coming six months in order to help make ends meet.

According to the survey results, approximately 60 per cent of respondents indicated regret after taking out payday loans. Mr Walker remarked that, in light of the research findings, the OFT should be collecting and publishing figures concerning the payday lending industry.

The OFT regulates the industry, the regional chairman added, as these lenders cannot operate without a consumer credit license. The number of loans taken out annually, the number of the loans that rolled over, and the value of these loans need to be made public, Mr Walker insisted, suggesting that the OFT should either begin collection of such figures – or if they do collect such data, to publish them.

Pearson Jones deputy managing director, Peter Heckingbottom, stated that borrowers need to be protected from over-exposure to debt by the institution of regulations. However, payday lending does have its own place in financial planning, Mr Heckingbottom also said.

News Payday Loans

Church of England says no investing in payday advance lenders

by Payday Loans

The Church of England, which already refuses to invest in doorstep lending, has recently made an announcement stating that it will now ban the practice of investing in payday advance companies as well.

Payday loans have been under fire lately from many fronts, as detractors have taken to calling providers of instant cash loans ‘legal loan sharks’ and have called upon the Government to regulate the industry more heavily. Lenders in the UK are not nearly as regulated as ones in Europe or in several American states, which has led to British lending companies charging a wide range of interest rates.

Figures recently revealed by the Office of Fair Trading have shown that consumers this year have been making complaints against payday lenders more than twice often than they did in 2010. Now, the Church of England, which has more than £8 billion in investments, has acted to extend it doorstep lending ban to be inclusive of the rapidly growing payday lending industry as well.

Church advisers expressed worries that it might end up investing in payday lenders operating within the country that were owned by American firms. The Church of England’s Ethical Investment Advisory Group’s chairman, James Featherby, remarked that the Church has come to the realisation that the universal importance of credit cannot be understated, but cannot bring itself to sanction investment activity in regards to companies providing payday loans to customers in the UK.

Meanwhile, industry insiders point out that while interest rates advertised by payday lenders are calculated on an annual percentage rate, or APR, which is grossly inappropriate for short term lending. Payday lenders have no choice to use an APR calculation in their adverts, experts say, as British regulations require them to do so.

News Payday Loans

Lincolnshire district warned against taking out payday loans

by Payday Loans

Residents of the Lincolnshire district of South Holland have been warned recently against taking out payday loans this festive season, as debt counsellors express fear that too many Brits may run up unmanageable amounts of debt through these short term loans.

While instant cash loans are ideal for helping those in need of cash in a hurry to meet unexpected costs, the Citizen’s Advice Bureau of South Holland feels that it could be all too easy for some residents of the East Midlands district to slip into massive debt. A group of insolvency experts recently claimed that, as the economic landscape of the UK persists in being uncertain and rocky, millions of Brits will most likely avail themselves of payday loans over the coming six months.

Downing Street has gone on record by stating it is attempting to regulate providers of payday loans through the institution of an industry-wide code of practice. This is in spite of the Consumer Finance Association’s statements stating that the scale of the problem needs to be disputed.

The South Holland CAB has remarked that it has already experienced quite a few clients who have sought out advice after running afoul due to payday loans. Diane Clay, CAB manager for South Holland, remarked that the repayment fees associated with payday loans can be quite expensive, and these fees and charges can add up all too quickly if a borrower neglects to pay the money back on the date repayment is due, adding that lenders can take steps to come after borrowers in order to regain their cash from those who fail to repay the loan in full.

News Payday Loans

OFT launching investigation into instant cash loans

by Payday Loans

The instant cash loans industry is bracing for an investigation by the UK consumer watchdog agency after protests against high interest rate payday loans have emerged, experts say.

Detractors of short term loans have stated that the fear of families already finding it hard to make ends meet could be victimised by payday lenders over the Christmas season as they make use of lenders’ services to purchase gifts and food. One such concerned organisation, the Child Poverty Action Group, has urged the government to undertake a policy review to put an end to UK households generating spiraling levels of debt, while R3, an insolvency trade body, has reported that 3.5 million Brits may be considering going in search of cash loans over the first half of the New Year.

With pay freezes, job losses, or pay rises not in line with the rising cost of living, the finances of British workers have been under siege by rising inflation and household bills. Three out of every five survey respondents indicated worry in regards to their current debt levels – an increase of 21 per cent from a year ago – and R3 says that this level of concern was a record high for the time the organisation has been producing reports.

However, the true cause of concern is that low income earners, left out in the cold by high street lenders, will have no choice but to resort to payday lenders, critics say. These detractors point to what has been referred to as ‘exorbitant’ APR interest rates of sometimes as high as 5,000 per cent – yet many industry experts state that the use of an unauthorised overdraft from a High Street bank can cost just as much if not more, and that using an annualised interest rate calculation method on a short term loan – something that all lenders in the UK are bound to by law – is inherently misleading in relation to the actual cash cost of the loan.

News Payday Loans

Government steps up its fight against unscrupulous lenders

by Payday Loans

The Government recently announced it will be stepping up its efforts in putting limitations on unscrupulous payday advance lenders as detractors fear that lower income earners could be drawn into a vicious cycle of debt by instant cash loans.

Consumer affairs minister Ed Davey made the recent acknowledgement that concern about payday loan providers was growing, remarking that the Government had begun discussions with industry leaders to make sure that enhancements to consumer protections were made in the form of codes of practice. David Cameron also weighed in on the issue, as a spokesman for the prime minister stated that Downing Street was hard at work with both consumer organisations and the industry itself to provide protection to vulnerable classes of people.

As the incomes of Brits continue to be squeezed in the face of growing economic uncertainty, reduced access to traditional sources of credit have led to a rapid increase in the use of payday loans, with current estimates finding that around 4 million make use of the service every year within the UK.

Both consumer groups and politicians have long been leveling their ire against the providers of payday loans, as annual percentage rates run extremely high – sometimes as much as 5,000 per cent. However, industry experts are quick to point out that using an annualised method of calculating interest is inherently misleading when dealing with payday loans, as borrowers typically pay their loans back within one month to 45 days, which means that the actual cost of the loan is much more manageable than detractors lead the public to believe.

Debate has been raging on whether the Government should formally cap interest rates, much in the same way some European countries and US states do. However, a government report stated that reducing access to these loans could result in lower income earners being even more worse off, as payday loans are often the last resort of individuals who cannot turn to a traditional lender for support.

News Payday Loans

Record number of Brits to take out payday loans this Christmas

by Payday Loans

A record number of Brits will be taking out payday loans in order to help paying for their Christmas spending, industry experts recently reported.

In excess of two million Britons are now thought to have applied for short term loans, which have become more and more popular as of late. Moreover, with the lion’s share of consumers already in receipt of their last payday before the advent of the Christmas season, industry insiders predict that demand for instant cash loans will be quite high in order to help make those last minute purchases.

Ferratum UK’s marketing and sales manager, Ian Porter, recently said that the demand for payday loans are expected to surge in the run up to the festive season as a result of many different factors, chief among these the need for Brits to make last minute food or gift purchases for Christmas.

However, Mr Porter also said that payday loans are becoming more known for providing access to quick cash to help in filling the gaps when you run out of money before your next payday. Ferratum, which is a leading payday lender, has seen substantial increases in applications for its services, even three weeks prior to Christmas day.

The payday lender conducts operations in 17 countries around the world, and since it has begun operating within the UK this past July it has seen rapid growth within the new market. The sales and marketing manager also said that Ferratum finds that Brits enjoy the flexibility of payday loans, as they are able to take out a loan from as little as £50 to as much as £300, and then take as long as 45 days to repay the loan.

News Payday Loans

Government to overhaul how borrowers repay debts

by Payday Loans

The Government has recently announced that it will be overhauling how borrowers repay their debts through several changes to be instituted as early as next March, members of the short term loans industry recently reported.

The changes are aimed to give customers of instant cash loans better deals, yet many of the measures have been criticised by industry experts as either going too far or not going far enough. The payday loans industry, in one example will be subject to a review of their code of practice if they offer loans with 1,000 per cent APRs or higher in order to provide enhancements to consumer protection, but industry experts have said that there will be no requirement on these companies to cap their interest rates, even though pressure groups campaigned quite hard for just this change.

The way banks handle overdrafts will be changing from March of next year, as banking customers with current accounts will be eligible to receive emails or text messages to inform them when they are in danger of dipping into the red and incurring an unauthorised overdraft. Meanwhile, the next year will see banks providing buffers to these customers as a grace period to prevent penalties being incurred for slipping anywhere from £5 to £10 into the red.

However, industry experts say that these changes will do little to actually make any real difference to current account customers, especially the poorest ones who are hit hard by punitive and expensive unauthorised overdraft fees Verdict: Little that will make a real difference. Some rejected transactions carry fees of as much as £6 per day, such as the taxpayer-owned Royal Bank of Scotland, while others, such as banking giant Santander, charge a flat £25 fee for dipping into the red.

News Payday Loans

Short term loans called good for those keeping strict budgets

by Payday Loans

Despite all the bad press payday loans have been getting as of late, industry experts say that short term loans such as these are excellent for those households keeping strict budgets due to adverse economic conditions.

Instant cash loans, or payday loans, are a recent import from across the pond, where households in the US have had access to them for many a year. The way these loans work is that you can gain access to as little as £100 or as much as £1,000 – and sometimes more, depending on the provider – for a short period of time, then pay back the loan once you receive your next pay cheque.

Payday loans have gone become increasingly easy to apply for over the past few months, as no longer do applicants need to comb through multiple payday advance providers. Instead, many loan websites will apply to as many as 30 providers from one single application, much like an insurance comparison site would for its customers.

Many members of the media have had harsh words for the high interest rates that accompany payday loans. However, the annual percentage rates advertised on these loans, which are a regulatory requirement, are calculated based on the kind longer term loans you would take out from a traditional lender, and are a poor fit in representing the actual costs of repaying these short term loans.

Calling the repayment cost of a short term loan ‘interest’ is a bit of a misnomer – as most lenders refer to them as fees, which scale according to the amount you borrow from them. With the average borrower only taking out a loan for anywhere between 20 to 30 days, costs are usually less than it would cost a borrower to pay the fees associated with an unauthorised overdraft for the same amount.

News Payday Loans

Are payday loans to be used only as a last resort?

by Payday Loans

One no credit check loans industry expert has recently come forward with words of warning for Brits, stating that those that may be considering taking out such a payday advance should only resort to doing so if they’ve exhausted all other options.

Payday loans provide a much-needed service to Brits who need cash quickly and without jumping through hoops in the event of a financial emergency, as funds can be deposited as soon as the same day in many cases. However, Debt Support Trust director, Stuart Carmichael, said that due to the high interest rates on these loans, individuals can end up in serious debt trouble if they don’t use these types of unsecured credit as a strict last resort.

Mr Carmichael remarked that Brits need to change their financial focus to living within their means, even though doing so in the current economic climate is an exceedingly difficult thing to manage for a good number of people struggling to make ends meet in the UK. The Debt Support Trust director also said that these types of loans always need to be taken out extremely sparingly and should never be paid back late in order to avoid the slippery slope of spiraling interest, commenting that the importance of people gaining understanding of how much repayment on the loan will cost is high, and that they need to know these costs before they take out the initial loan.

Mr Carmichael’s recent words follow on the heels of life coach and hypnotherapist Caroline Carr, a contributor for Mypartnerisdepressed.com, who said that anxiety, depression, and insomnia can manifest in borrowers feeling stressed about debt.

News Payday Loans

MP calls for cap on interest rates for forces payday loans

by Payday Loans

Members of the armed forces and UK ex-servicemen are being warned to compare interest rates if they are considering taking out a payday loan.

The MP for Walthamstow, Stella Creasey, has uncovered evidence that companies offering instant cash loans are deliberately targeting armed forces personnel.

Several short-term loan companies have a special website specifically for military personnel; quickquid.co.uk being a prime example.

The site praises the military for the security and protection they provide and tells them that military loans are available to protect them against financial problems. APR for someone repaying their loan when they receive their next salary is quoted as 2222.46%.

Worryingly, another site, www.easymilitaryloans.co.uk does not have a fixed interest rate and can therefore charge what it likes!

The Royal British Legion recently said that unsecured payday advances cause 33% of all the debt problems its Money and Benefit Advice service comes across. The Legion expects to deal with around 10,000 current and ex-service personnel with debt related problems in the coming 12 months.

Maybe the British government should consider a similar system to that in place in the United States. The Servicemembers Civil Relief Act protects members of the US forces from exorbitant interest rates by forcing lenders to cap the rate it charges on loans.

Ms Creasey is urging the British government to learn from this and commission research into the reasons why our servicemen are getting into financial difficulties and putting a cap on the cost of credit so that the military can get affordable credit from a dedicated forces credit union.

News Payday Loans

Free no credit check loans traps set by payday advance firms?

by Payday Loans

According to a spokesperson from the Consumer Credit Counselling Service, fee-free no credit check loans are simply traps set by payday advance firms to trick households into paying through the nose.

Extortionate interest rates lurk in the shadows of zero interest rate payday loans, waiting to ambush low and middle income families in the UK, says the debt charity’s spokesperson, Una Farrell. The chance to take out payday loans with a 0 per cent interest rate associated with it is a newcomer to the industry, but providers have said that they hope to aid UK households during a time when their financial woes have been mounting due to the economy.

However, Ms Farrell was extremely suspicious of the move. The spokesperson compared the effect of payday loans on financial health as the same as a dozen hungry dinner guests have on a plump, juicy Christmas turkey.

The new deal does sound almost too good to be true, as the terms 0 per cent interest on as much as £300 for a term as long as eight days, provided the borrower can prove they earn £750 or more every month. With the festive season nearly upon us, many Brits will find their finances stretched to the limit, and an extra £300 interest free for a period of eight days could prove to be quite the tempting offer.

There are fees, of course, if a borrower fails to repay the loan after the end of the eight day period. Borrowers should be prepared to pay 50p on every £100 borrowed every day until they repay their loan in full, which is actually much less interest than traditional payday loans.

News Payday Loans

Popularity of short term loans increase to 2 million Brits

by Payday Loans

The popularity of short term loans has been growing lately, with new estimates pointing to as many as 2 million Brits taking out payday loans.

The news comes from a payday advance company which launched four month sago in the UK. The company, Ferratum, which has operations in 17 countries around the world, ha reported rapid business growth since it opened its doors this past July.

During the 2009-2010 financial year, in excess of 1.2 million Brits took out payday loans. However, Ferratum remarked that more than 2 million Brits are now using the same day loans if its growth figures can be extrapolated to represent the entire British marketplace.

Sales and marketing manager for Ferratum UK, Ian Porter, remarked that payday loans may be the fastest growing sector in the financial services industry. Mr Porter reported that Ferratum found that people appreciate the flexibility payday loans offer them, as they have the ability to borrow as little as £50 to as much as £300 and have a maximum time period of 45 days to repay the loan.

Mr Porter said that, in the event that Ferratum’s own business growth is increasing at the same rate as the other providers of payday loans in the UK, there is a high likelihood that more than 2 million British consumers have availed themselves of the services of a payday advance company. More and more Brits are turning away from traditional lenders and their long term loans due to the inability to pass a credit check, even though payday loans carry higher interest rates and tougher penalties for default or even missing a payment.

News Payday Loans

Debt advice expert urges non-reliance on payday loans

by Payday Loans

One debt advice expert from Northumberland has been campaigning against payday loans recently, telling residents that they should avoid taking out same day loans to cover the cost of monthly expenses.

The chief executive of DAWN Advice, Liz Chadwick, issued her warning against using payday advance companies on the heels of news from Citizens Advice that there are four times as many people that could be in poor financial health and availing themselves of no credit check loans than there were two years ago. Ms Chadwick remarked that the advantages of payday loans, which include same-day payments, instant approvals, and the lack of any need for credit checks, can result in people being lured in without any consideration to the long-term consequences of such an action.

The Bladgon-based chief executive stated that these payday loans may seem to be the simplest and easiest solution to cover monthly expenses, but it can sometimes lead to just papering over the cracks instead of fixing the problem in a more permanent manner. In the event of a repayment deadline being missed, debts will roll over, she added, which can result in unsettled interest growing quite quickly and very easily getting out of hand.

Ms Chadwick did state that measuring payday loans against other forms of credit was exceedingly difficult, due to their very high APRs. However she acknowledged that payday loans are short-term, and are not used to provide credit to borrowers for nearly as long as a full year, though she did call using payday loans a ‘dangerous cycle’ that could pose difficulties in breaking.

News Payday Loans

Payday loans for bad credit solve financial problems

by Payday Loans

While detractors and critics of no credit check loans say they can do more harm than good, the truth is that payday loans for bad credit can solve short-term financial problems that could otherwise lead to severe issues for UK households.

Traditional lenders have taken issue with payday loans due to their high APR interest rates, stating that they can result in serious financial distress if a borrower misses a repayment. However, a large number of Brits who find themselves in need of such a loan are already in financial distress, due to a combination of constant increases in the cost of living and pay cuts or jobs losses, making it harder and harder for the average British household to make ends meet.

Payday loans do indeed have high APRs because they do not require credit checks of their applicants to take out, but that’s simply not the whole truth. The APR, which stands for Annual Percentage Rate, is a measure of how much interest a borrower pays on a loan over a period of 12 months, yet payday loans are almost always for short periods of time, with the typical loan have a term of only 30 days, with the typical fee for a 30 day loan being the rough equivalent of using an unauthorised overdraft.

Many industry experts believe that traditional lenders have tried to stigmatise the providers of payday loans as ‘legal loan sharks,’ portraying them as evil companies preying on the financially downtrodden. However, it could be said that Brits in a financial bind have no other choice, as these same traditional lenders who decry payday loans have ruined the economy, making it harder to make a living, and resulting in Brits developing poor credit scores which then precludes them from being accepted for a traditional loan – yet High Street calls payday lenders the villains, even though it may indeed be the other way around.

News Payday Loans

Haslingden MP backs petition to limit payday loans

by Payday Loans

One MP for Hyndburn and Haslingden has recently backed a new online petition to limit the ability for payday advance providers to offer quick loans to its customers during the Christmas season, calling these lenders ‘legal loan sharks’ preying on cash-strapped consumers.

MP Graham Jones has high hopes that governmental intervention will be able to place limitations on the short term loans industry in time for the festive season by launching an online petition, ostensibly to protect the members of his constituency. In a statement given after the launch of the petition, Mr Jones remarked that Hyndburn and Haslingden residents will most likely be facing increased financial pressures with Christmas approaching, and he has concerns that they will be turning to payday loans in order to make ends meet during the festive season.

Stating his determination to protect his constituents from being exploited by what he referred to as the ‘high-cost credit’ industry, the MP is calling on the Government to institute credit cost caps before the festive season reaches full swing, calling on people in Hyndburn and Haslingden to join him in signing his online petition.

Mr Jones expressed his displeasure on the ability of home credit providers and payday lenders to charge whatever they like for credit, which he says can often lead to serious financial issues for their customers. The Haslingden MP’s petition is calling for similar consumer protection as it exists in North America and Europe, with caps imposed on lenders regarding the amount they are permitted to charge for credit, and Mr Jones called for concerned residents in Hyndburn and Haslingden to join him in signing the petition.

News Payday Loans

Could payday loans be to blame for debt problems?

by Payday Loans

Recent survey findings from one debt charity has suggested that payday loans may be to blame for debt problems in consumers, as more and more turn to instant cash loans for their needs.

The Debt Advice Foundation’s research survey discovered that 41 per cent of those that have debt problems claim these problems are as a result of using no credit check payday loans. Meanwhile, the number of searches for online loans has increased by double over the last 12 months, which may indicate the sector’s rapid growth.

The new research findings come on the heels of other findings showing that some providers of payday loans are poorly managed, with some firms allegedly offering consumers larger and larger loans as the months go by. Other providers were accused of ‘rolling over’ loans, offering deferred repayment if the consumer agreed to pay a high interest charge for the subsequent month, and one loan provider was even found to have not been operating with a consumer credit licence.

According to the DAF, 25 per cent of those taking out payday loans used the money to purchase food or other household essentials. 44 per cent reported using payday loans to pay off debts from other sources, and at 49 per cent, nearly half who had taken out payday loans said that, in their own opinion, they were not given enough information in regards to the rate they would be paying, not to mention the total repayment they would have to make.

DAF spokesman, David Rodger, remarked that many loan providers will quite readily point out that, since these products are so short term, it isn’t always appropriate to use an APR as a measure.

News Payday Loans

Payday loans can actually improve your credit rating

by Payday Loans

People with a less than perfect credit rating may think they will never be able to obtain credit, but that it is simply not true.

Financial experts now say that you can improve your credit score by taking on more debt! So, if you’re thinking of applying for a payday loan, you could actually be securing your financial future.

For years, we’ve been told that our credit score improves if we have little to no debt. Now, it has been discovered that this is necessarily such a good thing and in fact somebody with no debt may not have anywhere like as good a credit score as they thought.

This might sound a warped way of thinking, but if you haven’t had any debt for a while, how can credit rating agencies determine whether or not you are a responsible borrower? Therefore, experts now suggest that taking out small bad credit loans, and repaying them quickly, could be a good way of rebuilding your credit rating.

Some experts have also offered advice to people wanting to take out a payday advance. Firstly, don’t take out too many short-term loans. If you do, credit bureaus will think you are living outwith your means. However, if you pay off the ones you do obtain in a responsible manner, you will be classed as a financially sound individual and your chances of obtaining future credit will be enhanced.

News Payday Loans

Needing to rely on payday loans a symptom of stress?

by Payday Loans

Being in so much debt that you need to rely on payday loans to make ends meet has been claimed to be a symptom of stress from too much debt.

Life coach and hypnotherapist, Caroline Carr, recently said that psychological disorders such as anxiety, depression, and insomnia can be quite common for those that suffer from high levels of stress. These people often find it difficult to put their worries aside and relax because of these issues, said Ms Carr, and nothing can be more stressful than not having enough cash to pay your bills, which could necessitate taking out short term loans to bridge the gap.

The mental health expert remarked that stress releases toxins into the bloodstream, which are then absorbed by the liver. Individuals who fail to release these toxins properly can end up experiencing all sorts of unpleasant physical conditions due to this build-up of toxins, and worrying about finding cash loans to pay the bills can be a massive source of stress.

Those who need to take out payday loans on regular intervals may be using this lending to hide from quite serious financial concerns, according to Consumer Credit Counselling Service spokeswoman Una Farrell. Ms Farrell also said that these financial problems can snowball all too quickly and easily, as the ability of an individual to make ends meet on a month to month basis can be severely impacted in a detrimental manner by taking out payday loans.

As with traditional loans, payday loans require borrowers to repay the loan with interest, which means that the effect of not having enough cash on hand can become cumulative all too quickly.

News Payday Loans

Cheapest UK payday loans will soon be launched in Sandwell

by Payday Loans

Hard up Brits living in the Sandwell area might be interested to learn that the 6Towns Credit Union is soon to start offering cheap payday loans.

The not for profit organisation, which offers financial advice to anyone either living or working in the Sandwell area, claims that their short-term loans will be the cheapest in the UK. The estimated launch date is the first of November.

Applicants must be over the age of 18 and working a minimum of 20 hours per week. In the first instance people will only be able to apply for small loans up to a maximum of £400 and they must be able to repay the money in full within a period of 28 days.

Meanwhile, a lot of people may be wondering how providers of instant cash loans decide who it is safe to lend to.

Wonga, in common with the majority of payday loan providers, have a secret algorithm that is used to determine an applicant’s suitability. Wonga has been in the short-term loans business since 2007. They only lend amounts of less than £1,000 and have been accused of charging exorbitant interest rates. Since its launch, the company has made in excess of 2.5 million loans; and 830,000 of them have been in the last 12 months.

It might surprise you to learn that Wonga conducts between 6,000 and 8,000 checks on every applicant! You are asked to provide some of this information and some is publicly available over the Internet. All the information then gets fed into the algorithm to determine an individual’s creditworthiness and if the final result passes muster, the amount requested is transferred within 15 minutes.

News Payday Loans

Select pawnbrokers now providing quick loans

by Payday Loans

As consumers strapped for cash in the post-recession economy continue to sell off old pieces of unwanted jewellery, some UK pawnbrokers are beginning to provide quick loans to their customers as well as their traditional services.

Specialising in offering finance to customers who have been turned down by more traditional lenders, these pawnbrokers have begun to offer payday loans to those in need of emergency funds in the short term. One of the few sectors that have actually exhibited growth in these troubled economic times, pawnbrokers have been providing help to consumers in need of funds by purchasing their valuables and providing them with fast loans to help make ends meet.

Barry Stevenson, chief executive of Albemarle & Bond, one of the largest pawnbrokers within the UK, said that the firm now has 202 outlets in operation, up from 115 in 2009. Gross profits also grew to £31.5 million, an increase of 12 per cent, which Albermarle & Bond attributed to higher average loans per pledge, an increase in gold prices, and also the rise in its number of stores as well.

The pawnbroker’s pledge book, which is comprised of the value of its pawned loans, increased by a factor of 15 per cent to £3539 million, while its gold buying profits increased by more than 25 per cent to £14.6 million. The group’s bottom line was also kept healthy by 40 of its outlets being so-called ‘pop ups,’ or shops with short term leases and low installation costs that are specifically designed to accept gold from consumers in exchange for quick cash that can be used to pay bills.

News Payday Loans

Middlesbrough Council warns against using payday loans

by Payday Loans

Midlesbrough Council has recently warned residents from using payday loans on account of the large interest rates these quick loans carry, industry insiders recently reported.

Officials from the local authority are preparing to write to the providers of these instant cash loans and requesting to learn what sort of checks are made on prospective borrowers in regards to how credit worthy they are prior to handing over the loan amount. Middlesbrough Trading Standards has also taken steps to urge people to think long and hard before borrowing cash from one of these providers, which follows on new adverts from lenders that seek to portray the loans in a positive light as valuable solutions to those in need of quick cash right away.

However’ the borough’s trading standards officials say that blisteringly high interest rates can result in borrowers landing themselves in hot water, as debts could easily spiral to the point where meeting repayments would be nearly impossible. Several of its clients have even been found to have used five quite similar lenders in quick succession, with officials stating that the typical APR on one of these payday loans can be as large as 4,000 per cent.

However, these loan providers refute the claims, saying that APR is a distortion of the charges due on repayment, as payday loans are designed from the bottom-up to be solutions in the short term. Lenders insist that a typical monthly loan for £100 has a solid and unequivocal fee associated with it, such as £30, but Trading Standards officials remarked that trouble is on the way if the borrower cannot repay the loan, as letting it roll over for a month will see even more charges assessed.

News Payday Loans

Are payday loans a boon or do they prey on the hard-pressed?

by Payday Loans

Payday loans have sparked controversy lately, with detractors saying they prey on those hard-pressed to make ends meet, while others insist that they provide a valuable service to those in need of emergency cash through short term loans.

Major campaigns have been launched to limit the scope and ability of quick loans. Walthamstow Labour MP, Stella Creasy, is at the head of the movement, stating that she has seen how these loans can rapidly contribute to higher levels of financial distress amongst her constituents.

However, proponents of the loans say that people should get the complete facts about how they work before condemning them. Many will point to the incredibly high APRs on these loans as one of the main reasons for damning them, as many have eye-watering figures such as 3,000 per cent, yet there are other ways to consider it.

Imagine a situation where you have five days until your next payday, but you encounter an emergency that requires cash to resolve. Going into the red on your bank account could result in incurring daily charges which could quickly balloon quite high, especially if a direct debit or standing order is turned down as a result.

Meanwhile, payday loans may charge you £20 on a loan of £100, but this fee could be much less costly than using even an unauthorised overdraft or similar facility. Then, when your next payday arrives, you can repay the debt and go along your merry way.

However, exceeding the term on the loan without repayment can result in fees of their own, so consumers must be aware of such dangers.

News Payday Loans

CAB calls for tighter regulations on no credit check loans

by Payday Loans

The Citizens Advice Bureau has recently entreated the Government to place tighter regulations on no credit check loans due to fears that too many consumers are slipping rapidly into unmanageable levels of debt.

Also called payday loans, these instant cash loans can be quite handy in the short term for those who are in need for small amounts of cash to help meet expenses before their next payday. However, CAB recently told reporters from the BBC that they were alarmed by the growth of these loans, leading to soaring debt, and have decided to ask ministers to intervene in the form of regulations designed to protect consumers.

Payday loans differ from more traditional lending in that you don’t need to take years and years to repay borrowed cash. Instead, these loans are meant to be paid back once the next payday of the borrower rolls around.

There are many benefits to payday loans that are managed well, such as providing access to short-term credit, not to mention that many payday loans are less costly than using an unauthorised overdraft, provided the payday loan is paid back promptly. However, if the borrower neglects to pay back the loan on the date specified, debts can quite quickly get out of hand, since interest rates on these loans are much more expensive than you would find on a traditional personal loan.

The CAB says that, over the past two years, the number of people have fallen into debt because they have neglected to pay back a payday loan promptly has grown by a factor of four.

News Payday Loans

The Welsh are becoming increasingly reliant on payday loans

by Payday Loans

The worst-off people in Wales are getting caught up in the cycle of payday loans and leaving themselves in debt to the tune of thousands of pounds.

Small short-term loans are heavily advertised, and these can be a godsend to people who need a one-off sum to tide them over to the end of the month salary day. However, consumers should be careful not to become reliant on this form of finance because payday loans do attract high interest rates.

Since the recession, wage increases have not kept up with inflation and a lot of people have been struggling to make ends meet. More than 30% of Welsh adults have an overdraft with their bank or building society, 28% have a personal loan and just under one in four have at least one outstanding credit card to pay off. In addition to these debts, one in eight is paying high interest rates to a doorstep lender.

Data from the British Bankers Association showed that in excess of £34 billion was outstanding on credit cards at the turn of this year. However, with banks tightening their lending criteria, the amount outstanding on personal loans was £45 billion – the lowest in ten years.

To combat this lack of funds from traditional lenders, more and more people have turned to other means of obtaining finance and this has led to an increase in unscrupulous lenders who pray on the desperation of people struggling to survive.

Payday loans should be seen as a last resort not a regular monthly occurrence. They are a valuable way of meeting a one-off payment but a lot of people would find it better to set aside a budget for unexpected eventualities rather than relying on a payday advance.

News Payday Loans

Are payday loans truly more costly than using an overdraft?

by Payday Loans

With one of the biggest criticisms of payday loans being their exorbitant interest rates, many providers of quick loans have published a comparison chart that highlights the relative cost of such a loan with a bank overdraft.

Providers of small loans can actually be quite favourably compared with bank overdrafts, according to the research. With a sum of £100 borrowed for one month, payday loans can sometimes be cheaper than using an unauthorised overdraft, though authorised overdrafts are oftentimes a better choice due to the high APRs advertised on these quick loans.

Martyn Saville, a credit expert from Which?, remarked on the research findings, stating that it is true for the most part that companies offering payday loans claim that they are less expensive than using an unauthorised overdraft. However, Mr Saville said that both unauthorised overdrafts and payday loans are not as good a value for money in comparison to an authorised overdraft, and if a consumer has such an overdraft available to them, they should avoid using the more costly options.

The credit expert also said that consumers need to exercise some wariness when reviewing payday loan providers and their APR claims. Some websites will compare a five year and three year loan, both of which have a 19.9 per cent advertised APR, with their own 30 day payday loans with a 1,737 per cent APR.

The comparison concentrates on the actual amount of interest paid for each option, with the conclusion that the repaid interest on a longer term loan is considerably higher than on one of their payday loans. However, some credit experts feel that such an argument can be misleading, as an interest charge of £125 on a 30 day long £500 loan is clearly not as good a value as a £153 charge over a span of three years, leading experts to say that consumers need to not just think about the amount repayable on the loan but also about the length of the loan as well.

News Payday Loans

Debt from short term loans quadrupled in past 2 years

by Payday Loans

According to one debt advisory service, debt levels from short term loans has increased by a factor of four over the past two years.

Small-scale, short term unsecured loans, sometimes called payday loans, are designed to hold people over until they receive their next salary payment. However, it may be too easy to get approved for such small loans, according to the Citizens Advice Bureau, which has called for tighter regulations on the industry.

However, Ed Davey, Consumer Minister, has said that pushing for more stringent measures could result in those in need being pushed into the clutches of illegal loan sharks. This could have a serious impact on many, as a large number of people use short term loans as a legal, efficient, and quick way of obtaining sorely needed credit in the shorter term

While many detractors of payday loans are critical of high interest rates, if the loan is repaid in a timely manner by the borrower’s next pay day, this form or lending can actually be less expensive than paying a credit card charge or an unauthorised overdraft fee. However, debts can escalate very quickly if the loans are dolled over, as some firms charge more than 4,000 per cent in interest rates.

Citizens Advice Bureau spokesman, Peter Tutton, remarked that ministers need to take action quickly in order to protect people, as the current regulatory regime is not doing so properly. Mr Tutton said that the government needs to take a serious look at the effectiveness of consumer credit, as consumers need to send a message to companies that it is simply unacceptable to treat their customers in such a terrible manner.

News Payday Loans

Experts recommend payday loans for bad credit histories

by Payday Loans

If you’re in need of some extra cash in order to make ends meet, but traditional lending institutions are hesitant to give you access to finance due to a less than stellar history, experts have recommended you consider firms that specialise in providing payday loans for bad credit histories.

These companies specialising in no credit check payday loans will approve your application without a glance at any horror shows that may be lurking on your credit report. For those concerned about exorbitant fees and interest rates, many firms will have a selection of loans to choose from, all of which will have differing rates of interest.

Experts say that these types of payday loans can be a great boon for people in need of cash in a hurry but have either bad credit or no credit. Many providers of these loans are established lenders, offering exclusive and competitive loans with affordable interest rates. With the current economic landscape being bleak, many Brits need help making ends meet when unforeseen circumstances occur, and these lenders understand how urgent the need can be for quick cash in a pinch by making the loan application process so quick and easy that you can even submit your application online.

Many of these loans can be secured without the need of faxing any paperwork, instead featuring an online application process where the applicant needs to only input their details into an online form. The lender will then transfer the cash directly into your bank account, sometimes as quickly as just a few minutes.

Experts say that anyone in need of such a loan should be careful before committing to any lending agreements, as there are some disreputable companies operating that can charge exorbitant rates, necessitating a thorough investigation of the terms and conditions of each loan offer.

News Payday Loans

Families in Scotland turning to payday loans to make ends meet

by Payday Loans

As household finances continue to feel the squeeze, more and more families in Scotland are turning to payday loans in order to make ends meet on a monthly basis.

Firms specialising in short term loans have been reporting demand from middle-income families has risen, leading to support to restrict the interest rates these payday advances charge. The number of people in Scotland seeking aid after taking out payday loans that have led to increased debt has been on the rise over the past few months, according to Citizens Advice Scotland.

The increased numbers of distressed Scots has led to the government springing to action, with the Scottish parliament reviewing a bill in the next few weeks that could introduce limits on the interest rates currently charged on repayments of payday loans. However, the sector is indicating strong growth while pressures continue to mount on household finances.

Both middle-income and high-income earners are now accounting for the lion’s share of several firms specialising in payday loans, such as InstantLoansDirect and Wonga. More than 50 per cent of those taking out loans earn anywhere from £25,000 and £50,000 a year, according to InstantLoansDirect, while the firm stated that those earning more than £50,000 account for 19 per cent of their customers.

90 per cent of the firm’s customers are not only employed full-time but also borrow £250 on average, which is close to the £300 maximum loan amount offered by the company. Meanwhile, 75 per cent of Wonga’s customers have access to credit cards, overdrafts, and other mainstream credit options, with a Wonga spokesman stating that the firm’s typical customers are young professionals who earn close to the average national income.

News Payday Loans