Tag: payday lending

The True Cost of Payday Loans

Posted by admin – January 9, 2012


It’s often asked why payday loans are so expensive; with huge annual interest rates sometimes quoted, implying that rich companies are profiting at their customers’ expense.

When investigating why short term loans cost what they do, it’s worth pointing out that it’s very misleading to talk of APR in relation to these kind of loans, as the loans are made over a much shorter period of time.The annualised interest rate is easily in the triple-digit range, but these astronomical figures really bear little relation to the actual cost of the loan products.

Using the same reasoning, you could quote the price of a taxi at £15,000 per 1,000 miles, or £50,000 for a ton of oysters,…

Democratisation of credit

Posted by admin – September 9, 2010


Payday loans have always been in the firing line for their ‘debt-creating’ tendencies. Critics have stopped just short of calling these lending practices ‘criminal’. However, the juggernaut of payday lending has rolled on. For good reason, this! As Dr. Lehman and Marc Kilmer discovered, lenders do not necessarily “trap people in a cycle of debt”. The justification is simple. People, who are already in a financial mess and whom high street ‘lower risk’ lenders reject, are the ones approaching payday lenders to wriggle out of their “pre-existing” money hassles. The question is – will a payday cash advance add up to the debt or offer a solution to the same? The answer evidently lies in how efficiently the borrower manages his/her loan.

High interest rates are not an indicator of the ‘obscene’ amount of profits that lenders potentially…

Lending Money Can Be Tricky

Posted by admin – August 19, 2010


Lending money to family or friends can be a tricky deal. When people need some cash suddenly the first thing they think of is borrowing from family or friends, first because it seems like an easy deal, and second because any loan that they get in such a way is interest free. When we cannot borrow from anyone close to us is when we look for other sources of credit. Most often these credit sources are banks, or money lenders, and pawn-brokers, depending on the amount we want to borrow.

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Payday Loans Are The Alternative, When Banks Offer No Alternative

Posted by admin – August 18, 2010


While the demand and need for payday loans in the UK was established some time ago, people still were reluctant to understand and accept the evolution of the payday loan industry, which ensures more protection to the borrowers as well. Research on the payday loan industry in the UK shows that a majority of the people in the UK use payday loans, reveals BBC news.

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Responsible lending in the payday lending industry

Posted by admin – November 6, 2009


The concept of responsible lending or irresponsible lending (as some might say) is elusive to a large extent, since there has been no clear direction from the government or legislative regulatory bodies. Unclear scope of this legislative piece has put consumer action groups and credit lenders face to face in a stiff battle, each interpreting laws in their own way to eke out benefits.

The OFT along with the BERR has launched a consultation to define the scope of the Consumer Credit Act 1974 (as amended by Consumer Credit Act 2006) with regards to responsible lending.

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Payday Loans – Bait or Manna?

Posted by admin – August 27, 2009


Dangle a juicy carrot in front of a hungry rabbit and rest assured that the animal will nibble on it. The situation is similar in the current economic clime where payday lenders are cashing in on the desperation of credit hungry consumers. The industry per se has drawn a lot of flak in recent times for a variety of reasons. Some believe that lenders are using “aggressive marketing techniques”, while others feel the APRs are ridiculous. Since lenders conveniently ignore the fact that their customers are people who are already struggling to keep insolvency at bay, the efforts to woo them are usually centered on “your need – our solution” campaigns. So, the target audience is essentially the credit hit section of UK that is lured into a baited cage with the promise of…

Popular Payday Loan Myths Busted!

Posted by admin – June 9, 2009


payday-loan-mythsSecuring a payday loan can be a daunting endeavor, especially for a first-timer. The various stigmas attached to the concept of payday loans might add to your sense of unease. Here is a break down of the common myths circulating about the payday loan industry:

Payday loans charge a ridiculously high rate of interest

By providing an unsecured loan to a customer in need, an online payday lender is at considerable risk. Therefore, the interest rates charged by payday lenders are higher than those charged by banks. However, the interest rates of payday loans are very reasonable, at approximately £25 for a payday loan of £100. Also, the interest rate on a payday loan is dependent on the duration of the payday loan taken, and the faster the payday loan is repaid, the lesser will be the…

Beat The Credit Crunch With A Payday Cash Advance!

Posted by admin – June 8, 2009


Small Loans

“The Credit Crunch” – What was once a term used only by economists has now become so common-place that it has been added to the Oxford English Dictionary. World-over, the common man is now finding it increasingly difficult to obtain personal loans, under extremely challenging lending conditions. The situation is even worse for an individual with a bad credit history, as banks have become very gun shy about lending even small amounts and have made their lending criteria more stringent than ever.

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