Bad Credit Payday Loans


Before I begin I must clarify one thing. During this article I am making reference to Bad Credit Payday Loans. In the past this has been read by many as 'a guaranteed loan regardless of how poor my credit rating actually is'. This is definitely not the case now as tougher regulations demand a high level of creditworthiness and affordability assessment. When I make reference to these loans I am simply implying that they may, yes may, be available to those without a perfect credit history spanning the last 6 years and which may prevent them accessing other forms of mainstream credit.

There is a lot of uncertainty around the financial economy. The entry of payday loans in the finance market has increased this uncertainty, though that was not intended by the inventors of payday loans. The bad credit payday loans were severely questioned because of the fact that they were providing loan opportunities for people with bad credit records. Payday loans while always regulated under the Consumer Credit Act were not proactively monitored by the previous regulators. The FCA (Financial Conduct Authority) took over regulation in 2014 and took drastic action. The payday loan industry needed to be regulated immediately because it was becoming one of the most popular, yet the most criticized loan arrangement facility amongst the public.

 

Payday loans were conceptualized with a view to create a readily-available credit source for middle class borrowers who have a stable employment, thus guaranteeing a steady source of income, and who are not always ready for urgent financial crisis. For example, a major and unanticipated car repair can be a great blow to a person’s wallet, and it may not be feasible for him to pay up most of his salary into the repair. Another example may be of the person who has had to take some unpaid sick leave. The payday loan lenders target such people to whom to offer their services.

The situation, however, is changing now. A sudden wave of regulations has hit this section, creating quite a shake up for all concerned. The FCA, the new regulatory authority, has reviewed the payday loans sector as a whole to see what was wrong and enforce suitable changes to protect borrowers from practises which were doing a lot of damage to the financial condition of the borrowers, pushing them towards debt. Major reasons include sky-rocketing interest rates, high penalties, and the torturous methods of loan recollection.

Some borrowers who had a bad time with bad credit payday loans have been suffering through intolerable ways at their hands.

It is important to take a look at such cases to know that some payday lenders do adopt inappropriate methods of collecting money from the borrowers, even if they owed the money. But it is important to note that borrowers do have rights and are backed by the law. They can file complaints against the lenders and get their rights secured. You can take an action against your lender if-

  • If the total cost of the loan was not made clear by the lender, you can file a complaint against them for hiding the extra charges. It is the responsibility of the lender to tell you about each and every fee that is involved in the loan.

  • If incomplete and inaccurate information was provided to you about loan repayment procedure and policy. It is advised that you document all the conversations you had with the lender, as it would make it easier to prove in the consumer court.

  • The lender is responsible to check your background completely and to verify that you are indeed able to pay back the loan that you are taking. He must make you clear about everything that is involved about the defaults policy.

  • The lender is bound to tell you about the working of CPA. CPA (Continuous Payment Authority) is the permission that you give to the lender in writing that the lender will deduct the loan amount automatically on your payday. CPA is a matter of mutual agreement between the borrower and the lender.

  • You have the right to know about the intervals when the amount will be deducted from your account. Also, you should be told whether the amount will be deducted in one go or whether you will have to pay it in instalments. This is carried out by CPA normally.

  • The lender must discuss with you the implications that can develop if you do not pay your dues on time. This must be done through mail or advertisements from the lender’s side. This requirement is mandatory to all the lenders.

Borrowers must understand that it is important to look at these points from the point of the view of lenders also. The complaints are the guidelines for the lenders to continue their work professionally. If not done professionally, it can raise problems for the borrower as well as the lender.

Representative Example: Representative 1286.98% APR on a loan of £300.00 with 5 monthly repayments of £101.03 Total amount repayable £505.13 Annual interest rate (fixed) 290%

 

 

Warning: Late repayment can cause you serious money problems

For help, go to moneyadviceservice.org.uk

Representative Example: Representative 1286.98% APR on a loan of £300.00 with 5 monthly repayments of £101.03 Total amount repayable £505.13 Annual interest rate (fixed) 290%

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Author: Internal Marketing Department