Hi everyone,

Firstly, thanks so much to all those people that have shared their personal experiences of using payday loans, without which I would never have been able to produce this video. It took me a while to organise the several hundred messages I received, but I got there in the end!

I must confesses, despite the fact that I have spent many (many!) hours researching the payday loans sector, it’s been real eye-opener hearing what some people have been through over the past few years.

I touch on these inside the video and also reveal the five most common issues with payday loans, based on what YOU have told me. This will hopefully act as a warning to anyone considering taking out a payday loan, so they can avoid the same things happening to them.

It’s not too late by the way to drop me an email or comment on this video if you’ve not already done so below. I’d also REALLY appreciate it if you could share this video with your friends using either one of the social buttons (Twitter, Facebook, Email, Google+) above.

Speak soon,
Martin Smith

Transcript of this video: Payday Loan Issues

Hiya, my name is Martin Smith, and welcome to the Payday Loans Information Centre.

As promised, in this video I’m going to talk about some of the more common things that can go wrong with payday loans, and what YOU can do to avoid them.

The video is gonna last around 3 minutes and will reveal some pretty scary facts, which, once digested, will hopefully PREVENT you from getting ripped off and suffering the same grim fate as so many people before you.

This is now the third in a series of videos that I’ve posted on my website, having received such an awesome and dare I say it overwhelming response to the first two.

In fact, if you’ve just landed here without at least having watched my welcome video on the home page, PLEASE check this out first, as it’s a great starting place for anyone searching for help and advice on payday loans.

For me, the amount of feedback i’ve received on that welcome video in particular has been insane, and I only really decided to record this latest video after reading the thousands of emails and real life stories that were sent in as a result.

Ok, let’s begin.

I’m going to assume that you haven’t as yet taken out a payday loan but you ARE considering it. As with video 2, where I spoke about the payday loan alternatives, I’ll now run through what I believe are the top 5 issues that can occur when you get a payday loan.

I’m seriously not trying to shock you with this list so please don’t freak out over there, but trust me when I say that ALL of these issues have been directly experienced by people just like you and me.

People that blindly went down the payday loans route because they needed cash quickly, but were totally unprepared for ugly truth that followed.

Issue number 1. The Rollover Trap

This is something I covered off in the welcome video but I still think it’s well worth hammering the point home here.

The rollover trap is a phase I use to describe the scenario where someone is continually forced to defer payment or ‘roll over’ an existing payday loan to the next month.

I’ve got a real problem with this because payday loans are supposed to be used as a SHORT TERM solution when you run out of cash, which is why the interest rates are so high, compared to a traditional LONGER TERM bank loan.

This problem is compounded because each time a loan roll is rolled over, the payday loan provider applies a fee, so not only are you paying a stonkingly high rate of interest on the original loan, you’re also now paying the equivalent rate on the accumulated interest and roll over fees.

To prevent this snowball effect, some politicians have argued that there should be a cap on the total cost of borrowing applied to each payday loan. Unfortunately, as I record this video, no such cap has been brought into law.

Issue number 2. Continuous Payment Authority

Never heard of it? You’re not alone. In fact, I read more than 150 emails on this very subject and all made reference to the fact that, despite causing a whole heap of problems, nobody knew what the heck a Continuous Payment Authority was when they first took out a payday loan.

Ok, so let me explain. a Continuous Payment Authority (or CPA) is something that’s included within the credit agreement that you sign as part of your payday loan application. At this point, you would have also handed over your debit card details from which the payday loan provider can take back their money.

So far so good right?

Well, unfortunately not. Because now that they have both the CPA and debit card information, the payday loan provider effectively has FULL permission to withdraw money direct from your bank account and, and this is the scary bit, this method of payment can only be cancelled by the payday loan company, NOT you.

To make matters worse, the CPA is not covered by any sort of bank guarantee which basically means that your bank CANNOT be held liable for any payments taken out of your account.

So, let’s just say that you run into further money problems and you simply cannot afford the repayments, the payday loan provider can, and most definitely WILL, continue to withdraw money from your bank account.

Issue number 3. Lack of Repayment Plans

On the whole, payday loan companies are setup to run in the most cost effective way possible, without carrying much in the way of fixed overheads or employing loads of staff.

What this basically means is that their business model relies heavily on
automation (I.e computers), and once they’ve lend you money, they’ve got a REALLY set way that you need to pay it back.

Unfortunately, this doesn’t work when customers are seriously struggling to repay their loan and ask to setup some kind of flexible repayment plan.

These are designed to give someone in this situation the opportunity to repay smaller amounts over a longer period of time, usually without the sky high interest rates.

I know it’s harsh but the truth is, NO payday loan provider is going to want you to pay the original loan back in this way because they’re not going to make anywhere near the kind of profit that they’d usually get from the average customer.

And it’s for this reason that getting a payday loan company to agree to a repayment plan can be a real challenge.

Issue number 4. Collections Harassment

This one really pisses me off. I know they have a business to run, but the way some payday loan companies go about getting back their money is nothing short of a disgrace.

I’ve heard stories of harassment by telephone, text, email and post. Even personal visits and threats at home or work aren’t off boardaries.

I’m not pointing the finger at the entire industry here, as there’s clearly some reasonable companies out there when it comes to collecting their debts, but from what I’ve seen it’s absolutely essential that you pick the right payday loan provider or potentially suffer the consequences.

Issue number 5. Aggressive after selling

After the sometimes painful experience of borrowing from certain payday loan providers, you may think that you’re out of the woods.

Unfortunately, now that you’re on their radar so to speak, it’s quite common to receive regular correspondence from companies enticing you to take out further payday loans.

I’ve read many stories where customers receive countless emails and text messages, claiming that with just a simple click of the button, they could access their ‘Pre approved’ loan and have the money in their bank account within the hour.

It’s an easy sell for the payday loan company, and many will deliberately send out these messages at the precise times when they know they’ll get the biggest response rate (I.e towards the end of the month).

For most customers, these are a nuisance, and even if you contact the payday loan company and ask to Opt Out of such communication, there’s no guarantee you won’t receive a similar message from one of their many affiliates.

So that’s my top 5 issues that can occur when you take out a payday loan. This by no means the definitive list, but certainly the ones that trigger the most complaints, based on the feedback I’ve received via this website.

I hope you now have a good idea of what could go wrong should you decide to go down the payday loans route. The way I see it, if you want to avoid these things from happening to you, you’ve basically got two options.

You either stay away from them completely and instead look to borrow the money from some other source (in which case I suggest you watch my payday loan alternatives video right after this), or you DO take out a payday loan BUT, and this is a very big but, you pay every single penny of it back the very second it’s due.

I hope this video has been useful and you take on board the things I’ve had to say.

I’m Martin Smith, thanks again for listening and I’ll talk to you soon.