Category Archives: Payday Loans

Getting your payday loan approved: What payday loan companies look for 

Getting Your Payday Loan Application Approved

Although payday loans are available to almost anyone, even those individuals with bad credit, you aren’t assured that your payday loan application will be approved if you apply. You can increase your chances of your payday loan being approved by choosing lenders with a high approval rate (Swift Money has a 97.5% approval rate, one of the highest in the UK payday loan industry), however, you still aren’t guaranteed of an approval. So, what can you do to increase your chances especially today when payday loan lenders have become stricter due to tightening regulation? 

Shop around first

Before you apply for a payday loan, make sure you shop around first and see what other lenders are offering. It’s also important to ensure you meet the requirements and criteria. Applying for a loan can have a negative effect on your credit rating if you apply for a loan you aren’t qualified for. It is, therefore, important to shop around and see which lenders are willing to lend you. You can use payday loan comparison websites to help you shop around for the best payday loan deals for you. Shopping around ensures you don’t waste time and damage your credit rating further applying for payday loans you can’t get. 

Find a payday loan lender who lends individuals with a credit score/rating like yours
Although most payday lenders don’t consider credit scores when approving loans, a bad credit score increases the chances of your application being declined. Furthermore, not all UK payday loan lenders offer payday loans to individuals with bad credit so you shouldn’t assume anything. If you already have a bad score and you are in dire need of a short term loan, you won’t have the time to improve your score. This is precisely why you need to find a lender who is a bit lenient with your kind of scores. You must, however, seek payday loans for bad credit from reputable lenders only since most lenders offering loans to individuals with bad credit tend to be loan sharks who charge exorbitant fees and coerce their clients for collections. Some even operate illegally without a license or FCA authorisation, so you need to be very careful. 

Make sure you meet the basic criteria for getting payday loans in the UK

Payday loan lenders are most interested in your ability to repay your loan. As a result, they focus on non-payment risks first. Almost all UK payday loan lenders lend to employed individuals only since such individuals are assured of a monthly salary (a payday). Lenders will also look at other requirements i.e. age. You have to be 18 years and above to qualify for a payday loan in the UK. You also need to be a UK resident with a UK bank account. Some payday loan lenders may still offer you a payday loan even if you are unemployed provided you have a guarantor. You must, however, investigate in advance and make sure you meet the basic criteria if you want to get your payday loan approved. 

Also, ensure you meet the affordability criteria

Sometimes being employed may not be enough to guarantee you a payday loan in the UK. You need to be in a position to afford the loan. Payday lenders assess a person’s net income after expenses before they approve applications. Ideally, you should have enough money to meet your loan repayment obligations as well as your other monthly expenses. Although the affordability criteria varies from one lender to another, your loan shouldn’t take up more than 10-20% of your net income. 

Don’t lie or provide inaccurate information in your application

Applications with false or inaccurate information are declined instantly so you must make sure you submit correct/accurate information if you want your application to be approved. You can start by checking your credit file to ensure the recorded information is correct. Any mistakes on a borrower’s credit file can affect their application. It takes approximately two months for a credit file to be updated so it’s important to check your file in advance. Never lie in your application. There are high chances of your lender finding out and informing other lenders making it almost impossible for you to ever get a payday loan in the future. If you’re not sure what information is in your credit file, make a point of checking.

Fill your application conclusively

Most payday loan lenders in the UK allow online applications. You must complete all the required fields in your application to make it extremely easy for your application to pass identity, credit as well as fraud checks. Failing to complete your application raises unnecessary red flags reducing your chances of getting your loan approved even in cases where you have provided accurate information. 

Summary

If you want your payday loan to be approved, you must know what payday loan companies look for in an application. First and foremost, an application must meet the basic criteria i.e. employment status, age, UK residency/citizenship/bank account, credit score, affordability, etc. The application also needs to be completed fully with accurate information. You also need to make sure you choose a payday lender that is most likely to accept your application which means you must shop around.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
Why Payday Loans are Here to Stay

Why Payday Loans are Here to Stay

The current state of the UK payday loan industry

Today may not be the best time for payday loan lenders in the UK given the recent FCA actions to streamline the industry. However, experts argue that payday loans are here to stay.
The FCA recently capped the maximum interest charges at 0.8% a day and the escalating debt at not more than 100% to ensure the total cost of interest and applicable fees never exceeds the initial amount borrowed. Payday lenders like Wonga.com have also been reprimanded for unfair lending practices.

These measures have been welcomed in an effort to help end bad lending practices that have been affecting the payday loan industry for years.
According to the Ombudsman, although the number of complaints about the industry seem to be increasing, the increase is because of the ongoing compensation as well as borrowers being more informed about their rights. Furthermore, most of the complaints the Ombudsman is handling include complaints about banks, insurers, and other financial institutions and not just payday loan lenders.

As a result, the current notion that the payday industry in the UK is falling apart isn’t accurate. Although many payday lenders are expected to go out of business, payday loans will still remain in high demand. So, why are payday loans here to stay again?

The FCA is taking the necessary action

The FCA has assured UK payday loan borrowers that unfair lending practices will no longer be tolerated. For instance, the FCA has made sure that payday loan debts never spiral out of control again even in cases where borrowers default for a prolonged period. Your loan fees and interest can never exceed the loan amount going forward.
Although this rule has seen may payday lenders go out of business, the demand for payday loans is still very high. According to the Consumer Finance Association, a group which represents payday loan lenders like The Money Shop, QuickQuid, and Peachy, the demand for payday loans won’t disappear despite the current measures. According to the Consumer Finance Association Chief Executive, Russell Hamblin-Boone, people may start getting payday loans from fewer lenders, however, the payday loan demand and debt levels won’t change significantly.
The FCA’s actions have increased the confidence borrowers have in the industry, and this can only make the industry stronger.

There are no serious alternatives to payday loans yet

Payday loans are also here to stay because their position hasn’t been threatened yet. Although there are over 370 credit unions in the UK that serve numerous worker groups and communities, the unions are yet to develop the kind of capacity payday loan lenders have. Also, the loans may be cheap and convenient, however, they can’t be remotely compared to online payday loans.
Other alternatives for payday loans in the UK include bank account overdrafts that are free of fees. With such alternatives, customers don’t incur any fees and penalties. Payday loans are more appealing because excessive fees and penalties have been capped and you get payday loans instantly online with very little to no requirements. For instance, you don’t need to be an existing customer of a payday lender to take out a payday loan. This isn’t the case with bank account overdrafts.

The high cost of traditional credit is largely to blame. According to Labour MP, Stella Creasy, the high cost of traditional credit is behind the strong demand for payday loans in the UK. Although people are extra cautious about payday loans in the UK today, they can’t help but continue taking them because traditional forms of credit are still inaccessible to many because of high-interest rates.

In a nutshell, payday loans in the UK are yet to face serious competition. Although there are currently many types of short-term loans and credit sources in the UK, none is as appealing or as promising as payday loans.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
Comparing Payday Loans Online Like a Pro: What you need to know.

Comparing Payday Loans Online Like a Pro: What you need to know.

There are 500+ online lenders in the UK offering all types of online loans available today. Different lenders, however, offer different deals so, how do you determine the best deal for you when there are so many options? How do you compare online loans like a pro? To help you avoid wasting time and getting confused in the process, below is a guide that lets you know everything you need to know.

Consider the loan amount

How much money do you need? What is the money for? Is the amount justified? Do you intend to spend the money prudently? These are some of the questions you need to answer when you want to know how much you need to borrow. Because different online loan lenders specialise in lending different amounts, you shouldn’t have a problem finding the best lenders for a given amount after you have established how much you need. If you want to borrow say £1,000, you should compare lenders who lend within these limits.

Consider the loan term

Once you have an idea about how much you want to borrow, you need to proceed and determine how long you want to stay with the loan. It’s important to remember that the best loans are those you pay off as fast as possible because they tend to come with better terms (low interest). Once you determine a suitable loan term, you need to compare what different lenders are charging for your preferred loan term. You should obviously go with the lender that charges the best rate for your preferred term. The lender should also offer options for early repayment without fees.
Interest

This is another obvious consideration. You should compare the interest rate charged by different lenders before you decide to choose a particular lender. To be able to compare interest charges like a pro, you need to understand how online loans are priced. Online loans like payday loans are priced in APR or annual percentage rate. This pricing structure translates into very high costs if you are unable to pay the loan in time. This is the main reasons why payday loans are considered expensive.

After identifying the lenders that lend within your loan amount and term limits, you should narrow down to lenders that charge the lowest APR. You should, however, be wary of lenders that charge 0% APR since such lenders don’t offer interest free loans as they would want you to believe. The interest-free period is likely to be very short and therefore insignificant. Instead, go with lenders who charge a realistic APR within industry limits i.e. between 1270% and 1509%.

You also need to consider if the type of loan you are taking has variable interest i.e. the rate changes according to the Bank of England interest rate. In such a case, the APR may not matter much especially if you will be holding the loan when interest rates are changing. A short term loan may be ideal in such a case since you may not hold the loan long enough to be affected by interest rate changes. All in all, you choose lenders that charge low fixed rates.

Additional fees

A lender may charge the lowest APR but have additional fees i.e. early repayment fees, processing fees etc. In such cases, you need to assess whether the extra fees make the loan more expensive than loans with higher APRs.

Consider using loan comparison websites

There are obviously very many factors to consider when you want to compare online loans. If you don’t want to spend a lot of time and energy considering numerous variables and computing them manually, you are better off using comparison websites. There are very many comparison sites today comparing online loans from all the major UK online loan lenders. The best sites compare all possible variables from the loan amount to the credit history, interest, monthly repayments, early repayment, name it! They also give accurate information which can be easily verified by visiting respective websites.

In a nutshell, you need to compare many loan options and variables to be able to identify the best lender for you. Most online lenders are sneaky, so you need to do your investigations. The lender you choose should cater for the needs of borrowers like yourself i.e. people with the same credit score, preferred APR and loan amount as yours. The lender should also offer favourable terms i.e. you shouldn’t pay fees on early repayments. The lender also needs to be reputable (licensed/registered/authorised by the FCA).

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
payday loan lenders

Payday Loan Lenders – What To Look Out For.

There are hundreds of payday loan lenders in the UK today which explains why it can be a daunting task trying to find a good lender. Furthermore, most UK payday loan lenders aren’t as good as they claim. Also, every single lender is different. It is, therefore, important to dig deeper before you choose a payday loan lender. So, what should you look for in a payday loan lender? 

1. Are they licensed/authorised/regulated by the FCA?

The payday loan lender you choose must be licensed. Otherwise, you risk landing yourself into problems. Before you borrow from any payday lender in the UK, ensure they are licensed and authorised/regulated by the FCA (Financial Conduct Authority). You can find such information quickly in the footer of the lender’s website (usually on the homepage). There should be information such as an FCA authorisation number, company registration information i.e. a business name, telephone number and address. Alternatively, you can check the FCA register (https://register.fca.org.uk/) to see if a lender authorised by the FCA. Licensed/authorised/regulated business entities are the best to deal with because they operate within certain legal bounds that ensure consumers are protected.

Swift Money is a fully licensed UK payday loans provider with FCA authorisation number: 738569. The company is registered in England and Wales. Swift Money’s headquarters is in Digital World Centre, 1 Lowry Plaza, The Quays, Salford, Manchester, Lancashire, M50 3UB. Telephone: 0800 567 7444.

2. What APR rate do they charge? 

After ascertaining that you are dealing with a fully licensed and regulated payday lender, you can proceed and find out how much they are charging. UK payday lenders state their interest rate charges as an APR (annual percentage rate) which can be confusing since payday loans are supposed to be repaid in a month. The most important thing to note is; you won’t pay the stated APR charge but a fraction of it depending on factors like the amount you borrow and how long you wish to stay with the loan. The best payday lenders tell you the total amount of money you are expected to pay before taking a loan so you shouldn’t worry too much about APR. However, a low APR is usually better.

SwiftMoney charges a lower APR when compared to UK payday loans industry leaders like Wonga, QuidQuick, Cash Lady, Sunny and many others.

3. Are there any additional/hidden charges

Some lenders have hidden charges such as faster payment charges which may not be disclosed outright, so it is important to do some investigations. The best payday loans lenders charge interest only. They don’t charge you for paying off your loan early. They also don’t charge other fees like loan processing or upfront fees before you agree to anything. There may be a late fee for late payment (usually £15) but such charges are clearly stated, and they can be avoided by paying off your loan on time. 

4. Does the lender offer an online loan application and management tools?

One of the things that make payday loans so attractive is their convenience. As a result, you also need to check if a lender offers online payday loan application, processing, and management. The best payday loan lenders have online account management systems which allow you to apply for loans, receive them and manage them easily online.

5. How secure is the lender’s website?

When dealing with online payday loan lenders, you need to assess the security of the lender’s website for obvious reasons i.e. to ensure your personal and financial information isn’t stolen. One of the best ways of knowing if the lender in question has a secure website is checking if there is a green name next to your address bar. The green name is an indication that the website’s identity has been verified thus the connection is secure. You should also look out for the URL address bar when entering personal information. You want to see the URL start with ”https” instead of ”http” as this is an indication that your information is protected from hackers. You shouldn’t deal with any lender whose website lacks these security features. 

Swift Money has a valid trusted server certificate and a secure TLS connection. The website uses a very secure protocol version & cipher suite that guarantees the highest levels of security. Furthermore, all resources on the site are served securely. Data Protection: ZA069965.

6. Reviews

You also need to look at what the payday lender’s past and present customers are saying. The best lenders are highly rated. Reviews are great for getting first-hand information about what it’s like dealing with a certain payday loans lender. Payday loan review sites are great for matching borrowers with the best payday loan companies depending on factors like amount, credit score, etc.

Swift Money has a 4.76 stars rating according to reviews.co.uk based on 37 merchant reviews

7. Does the lender have a disclaimer?

Responsible payday loan lenders like Swift Money make it clear to their customers that payday loans are not suitable for long-term borrowing or for individuals in financial difficulty. Avoid payday lenders that hide such facts because they aren’t operating in your best interests. You have the right to know how to get the best out of your payday loan or when a payday loan isn’t ideal for you. 

Summary

When you follow the above information to the letter, you should have a problem finding the best lender for you. Of course, there may be other important factors to consider when looking for the best payday loan lender i.e. loan approval rate and the presence of third parties/brokers. However, the above information is adequate to help you identify the best UK payday loan lender for you. 

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
payday loan myths

Top 6 payday loan myths

Let’s face it! The UK payday loan industry isn’t exactly in its best shape today. The industry has had a bad name for years now because of factors like unfair lending practices. Lenders who have been using unfair lending practices have given the industry a bad name and inspired some popular perceptions which may not be necessarily true. It’s important to discover these perceptions for you to be able to enjoy the full benefits of payday loans. Let’s get right into it and discuss the top payday loans myths.

1. Payday loans are ploys to rip you off

The bad publicity surrounding payday loans has led some people to believe that payday loans are just ploys to reap off people in need of cash. This couldn’t be further from the truth. Payday loans are the best types of short term loans for settling emergency cash needs provided you meet your repayment obligations i.e. you repay the loan off in time. Like most types of short term loans, payday loans become expensive when you miss a payment or default.

2. Payday loans benefit lenders only

This is another common myth surrounding payday loans. Contrary to popular belief, borrowers actually benefit from payday loans because they are easy to get when you are in desperate need of money. The loans don’t have a waiting period like conventional loans. They also don’t require collateral or credit checks. All these payday loan features benefit borrowers. Lenders just benefit from the interest borrowers pay which is very little if borrowers pay on time or in advance. 

3. Payday loans have hidden fees and conditions

Many people also believe that payday loan lenders add fees and make changes to the original terms of payday loans after they have been granted. This isn’t the case. The reason most people assume this is the case is because very few people go through all the terms and conditions initially when taking out the loans. The UK payday loans industry is highly regulated. All lenders must disclose all fees and conditions beforehand so it’s impossible for lenders to add fees and conditions once a loan has been taken. 

4. Payday loans are for people with serious financial problems 

Many people have been led to believe that payday loans are taken by broke or poor people. This isn’t the case. As mentioned above, payday loans are meant to finance emergency cash needs. As a result, taking a payday loan doesn’t mean you are poor or broke. It could just mean you didn’t have access to your money immediately when an emergency expense arose, or you just needed a little help because the emergency expense wasn’t budgeted for. Furthermore, there are statistics indicating that payday loans are taken mostly by the middle-class that are financially stable.

5. Lenders coerce payday loan customers for collections

Payday loan lenders are guilty of using aggressive marketing tactics, however, they don’t use threats or force when collecting dues. All reputable payday lenders like Swift Money use fair, lawful and professional means to collect past dues. Furthermore, customers who feel they have been coerced can always file formal complaints with the Better Business Bureau. It is also worth noting that there are measures in place i.e. interest caps to protect customers in case they have difficulty paying back their loans.

6. You are better off without a payday loan

Many people also believe payday loans don’t have any benefits. This couldn’t be further from the truth. Although payday loan lenders really market their loans aggressively, the demand for payday loans continues to increase globally, not only in the UK. This is a clear indication that people need payday loans and actually find them useful especially in emergency situations. 

This myth stems from the fact that some payday loan customers have had to pay high interest charges in the past because of unfair lending practices by a few rogue lenders. As a result, you can actually take a payday loan and benefit immensely. In fact, payday loans are among the best, if not the best, types of short term loans available today if they are taken wisely, used wisely and repaid on time.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
bank overdraft payday loans

Bank Overdrafts Are Now More Expensive Than Payday Loans!

It is well documented that payday loans have received plenty of criticism since
they were introduced, but what seems to have slipped under the net is that of
bank overdrafts. However, in a recent report by Which, it is clear that some
banks actually charge customers a lot more in fees than those of payday lenders.

The research from the consumer body examined unaranged overdraft charges and
discovered that customers could be charged up to twelve times and above for an
overdraft as little as £100. This was found to be across the board with several
large high street banks identified as culprits.

bank overdraft charges

Payday loan companies recently found themselves capped by the Financial Conduct Authority (FCA) on the charges that they can relay to their customers. The report found that for a loan of £100 for 28 days some banks would charge £90 which is more than 4 times the amount of a maximum charge for a payday loan lender of £22.40. RBS was found to charge £90 whilst name such as HSBC, Lloyds and TSB were a little less at £80. Which has said it believes the FCA should investigate unplanned overdraft charges and review what banks can charge too.
The Competition & Markets Authority (CMA) has said that banks should be able to
set their own unplanned overdraft cap.

In order to play fair it seems there should be some external body imposing
regulations on overdraft charges. There is now a clear disparity between someone
taking out a payday loan and someone, perhaps unintentionally, going overdrawn.
The latter could clearly be charged much more for ‘borrowing’ in some cases
a smaller amount. Which has stated that the overdraft charge issue could have a
large impact on the most vulnerable of people.

In their defence some banks have come out to say they do have measures in place
to help customers that go overdrawn without planning to. The banks say they
encourage customers to contact them if they are experiencing difficulties and
that arranged overdrafts could solve the problem of high charges.

The British Banker’s Association has supported banks and says that charges
today for overdrafts are considerably less than in 2008. They say tools like
online calculators, text alerts and itemised bank charges should help customers
manage their accounts and be aware of any issues quickly.

Whilst maintaining a two way dialogue with any lender is important those that
creep into an unplanned overdraft often should be aware of alternative sources
of lending that could be much cheaper.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
justin tomlinson

Tory MP Justin Tomlinson Suspended for Leaking Payday Loan Report to Wonga

As the FCA puts a tight grip on the UK payday loan industry, with interest rate caps and hefty fines to payday loan lenders found guilty of unfair lending practices, the displeasure seems to have started a long time ago from the highest levels of government.

Conservative MP Justin Tomlinson has been suspended for two days from the House of Commons for leaking a draft Public Accounts Committee (PAC) report. Mr. Tomlinson shared the findings of a draft report on regulating consumer credit with an employee of payday loan company Wonga back in 2013.

The ex-minister has been found guilty of ”committing a contempt” for leaking a draft parliamentary report. The incident happened back in May 2013 when Mr. Tomlinson was a PAC member and a DWP minister responsible for disabled people. 

An inquiry launched by the Standards and Privileges Committee investigated the matter and found the former minister’s action constituting to substantial interference with the work the public accounts committee whose main mandate at the time was protecting vulnerable payday loan borrowers from unfair payday loan lender practices. 

The final inquiry report recommended that Mr. Tomlinson apologises via a personal statement and then faces suspension from the House of Commons for two sitting days. 

Justin Tomlinson blames ”clouded judgment”

In his apology statement to the House of Commons, Mr. Tomlinson accepted he broke House rules but went on to claim that his judgment was clouded at the time of the leak. He stated that his true intention wasn’t to interfere with the work of the public accounts committee but to strengthen legislation on payday loan lenders in an effort to protect vulnerable consumers. 

In his statement, he claimed his actions were driven by a ”naive” desire to boost his contribution as a PAC member at the time. Mr. Tomlinson shared a confidential draft report on consumer credit regulation with a Wonga employee who replied with suggested amendments that he/she thought needed to be made on the report. He claimed he sent the report because he strongly believed that payday loan companies needed to be regulated further. 

Mr. Tomlinson went ahead and made a full and unreserved apology to the speaker and the House accepting the findings and recommendations of the Standards and Privileges Committee. 

The Commissioner for Standards has confirmed his claims of ”good intentions” stating that his actions and motivations were not intended on reflecting Wonga’s views or enjoying financial gain. This is based on the evidence available and the fact that Mr. Tomlinson has been on the forefront of protecting consumers. He has also been a strong supporter of tighter regulation in the payday lending industry for years now. 

Mr. Tomlinson was in agreement with other members of PAC at the time like chair; Margaret Hodge who accused some payday loans industry players of disgraceful practices. He however felt the need to do more (outside his mandate) since existing rules were ineffective in his own view.

The matter has since been laid to rest by the House speaker after Mr. Tomlinson accepted he broke House rules and apologies for it publicly.

Mr. Tomlinson was sacked as the disability minister back in July during Theresa May’s cabinet reshuffle. He hasn’t been offered another Government job.

People with disabilities have a higher probability of taking payday loans

The former DWP minister responsible for disabled people may have understood the importance of payday loans to people with disabilities. According to a research study done by Charity Scope, people with disabilities turn to payday loans more than people without disabilities. The study reveals that 18% of individuals with disabilities have already used payday loans while only 5% of non-disabled people have used the loans in the UK.

The state of the UK Payday loan industry today

These recent developments suggest that many people in the UK have seen a need for tighter regulation in the payday loan industry for years now. The current developments however suggest that the UK payday loan industry has improved drastically despite there being a drastic increase in the number of complaints. This is according to a survey done by Smart Money People. Payday lenders who have been found guilty of using unfair lending practices in the past are finally being brought to book. The most recent lender to pay for past wrongs is CFO lending. Just recently, the payday loan lender was ordered to pay its customers £34m for past unfair lending practices. 

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
doorstep lenders

UK’s Doorstep Lenders Are Going Online In Search of Growth

UK’s traditional doorstep lenders are moving online to take advantage of what is clearly the next growth frontier. Doorstep payday loan lenders, whose agents have been collecting cash from borrowers in UK’s most hard-bitten neighbourhoods for decades, have finally seen the “light”.

The move comes in the wake of rate caps imposed by the financial watchdog as well as other regulatory restraints on payday loan lenders which have created a perfect opportunity. Doorstep lenders can now enter the online space with more transparent loan pricing as well as sustainable repayment terms which borrowers have desired for years.

Progress

Provident Financial, a FTSE 100 financial services company, was the first to lead the way through its online business, Satsuma, which offers loans repayable on a weekly basis. According to Provident Financial, all indications suggest Satsuma will break even this year paving way for profits and the launch of a new monthly repayment product. Morses Club will follow Provident Financial’s path when they launch an online loan before the end of the year. The company, which was listed on Aim in May 2016, is the 2nd largest doorstep lender with 200,000 customers. 

According to Morses Club C.E.O. Paul Smith, the company has a unique opportunity to get a new set of customers given the fact that Morses Club has been receiving over 125,000 website hits monthly, most of which (75%) are from individuals searching for online loans. Paul Smith is set to reveal the terms of his company’s new online loan product during Morses Club’s debut financial results release in early October.

Morses Club, which owns Shopacheck, listed its shares on the stock market when its private equity owners Rcapital floated 49% of the shares. Although the company’s share price fell immediately after the initial public offering, the shares have recovered recent weeks. On Friday, the share closed at 112.5p compared to a 108p float price.

The opportunities for doorstep lenders venturing online is enormous given the fact that the UK has over 12 million consumers who don’t meet the credit standards of mainstream banks. Traditional doorstep lenders currently service approximately a sixth of these customers (2 million customers). These borrowers are heavily reliant on irregular employment or benefits and have little to no credit history. These consumers are forced to depend on costly credit to settle emergency expenses as well as pay for special occasions like children’s birthdays. 

According to the C.E.O of Provident Financial, Peter Crook, doorstep lenders offered their services to nurses, teachers, and public sector workers a decade ago, however, these customers now have online loans as their only option. 

There are however skeptics that feel the move by doorstep lenders to go online carries additional risks. Subprime lenders like John Van Kuffeler, CEO of Non-Standard Finance which operates as Loans At Home claims that online lending won’t work effectively with the lower end of the 12 million customers who don’t meet the credit standards of mainstream banks. According to Kuffeler, meeting face-to-face is much better than having online engagements from a credit assessment standpoint. 

Kuffeler claims that lenders should do home credit, go door-to-door or use a branch-based system to ensure face-to-face engagements. Kuffeler’s concerns appear valid, however, the demand for short-term unsecured loans is too high. 

Before the credit crisis in 2008, UK’s small-value short-term unsecured loans market was valued at approximately £12bn with Lloyds, Barclays and many other high-street lenders active. When the credit crisis hit, credit conditions tightened causing the volume of short-term unsecured loans written by mainstream banks to hit record lows. 

Payday loan companies stepped in to fill the resulting vacuum. Doorstep lenders are poised to step in and fill the void created by payday loan companies today on the wake of rate caps among other regulatory restraints imposed on payday lenders by the financial watchdog. The new regulations are making it hard for traditional payday loan lenders to operate. 

Doorstep lenders have also realised that people are no longer willing to borrow and service their short-term unsecured loans traditionally. There is, however, need for caution if doorstep lenders expect to stand the test of time. Industry players like Panmure Gordon analyst Donald Tait expect Morses Club to approach online lending cautiously given the fact that rapid expansion of unsecured lending was the main cause of the collapse of Panmure Gordon’s former parent bank, London Scottish Bank back in 2008. 

All in all, the opportunity is there for doorstep lenders that will be able to match risk with loan pricing perfectly given the fact that the subprime market appears to suffer from a permanent recession sometimes.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
payday loan compensation

Is The Payday Loan Compensation Scheme Causing a Rise in Complaints?

According to a recent report from the Citizen’s Advice Bureau (CAB) around 76%
of people using payday loans could have cause to receive a refund or
compensation. Finding out if you are entitled to any form of recompense as a
payday loan customer could depend on several factors.

Recurring Payments: a third of complaints received by CAB were found to relate
to the way that payday loans are often set up with recurring payments.
Information about how to cancel such a payment should be provided up front as
well as a schedule for deducting payments. A reputable lender will offer these
details readily so you should be wary if this is not provided.

Fraudulent loans: with one in five people reporting that someone else has taken
out a payday loan in their name without their knowledge it is important to go
with a lender that makes thorough checks to confirm identity. If you find
yourself a victim of a fraudulent loan then contacting the lender should be the
first step. Giving them the details of the fraud should enable them to resolve
the problem for you. If that doesn’t happen the next course of action would be
to contact the Financial Ombudsman Service.

Harassment: This can difficult to prove as there is no real measure of
harassment in place. As a general rule lenders shouldn’t contact you at
unsociable hours and should be aware of any personal circumstances. Each
situation is different so some may find some actions more upsetting than others.
Unclear repayment amount: It is now imperative that when taking out a payday
loan you should be fully informed and aware of the repayment amount. The
repayment amount is likely to be considerably more than the amount borrowed but
a person needs to be notified formally of what it is to avoid repercussions at a
later date. This information should include dates when repayments will be made
along with how and they should be extremely clear and not lost in small print.

Affordability: Payday loans often get a bad press because it is thought they
take advantage of people who can’t pay. In fact lenders need to be confident
that the debt can be repaid at the outset otherwise they could be accused of
lending irresponsibly.

Repayment problems: If you are struggling to pay back a payday loan then you
should contact the lender directly with a repayment proposal. If this is
appropriate the lender may freeze interest and associated other charges. They
should also point you in the direction of companies offering free debt advice.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
fca cfo lending

CFO Lending Ordered to Pay Its Customers £34m By The FCA For Unfair Lending Practices

CFO Lending has been ordered by the Financial Conduct Authority (FCA) to pay £34m in redress to approximately 100,000 customers after the payday loans lender was found to be guilty of using shoddy lending practices dating back to the company’s inception in April, 2009. 

cfo lending

The company has agreed to a £34m redress package in light of unfair lending practices which range from miscalculating outstanding customer debts to making unauthorised withdrawals from customers’ bank accounts. The company is also guilty of sending threatening and misleading correspondence to customers as well as failing to treat customers facing financial difficult fairly. The payday loans lender is guilty of rejecting many payment plan proposals by customers in financial difficulty. 

The FCA also found CFO Lending to be guilty of providing inaccurate information to credit reference agencies and failing to assess the affordability of its loans, particularly guarantor loans, potentially damaging its customer’s chances of getting loans in the future. 

According to Jonathan Davidson, the Director of Supervision at the FCA, CFO Lending was guilty of treating its customers unfairly warranting the redress. The FCA is, however, confident CFO Lending will address its past mistakes accordingly going forward. 

The lender was banned from contacting its customers with outstanding loans in August 2014 while it commenced a total review of its business. On completing the review, the FCA gave the lender limited authorisation to pursue outstanding debts. The company is still barred from issuing new loans. 

CFO lending is the latest short-term lender to face the wrath of the FCA following widespread criticism about payday loan lenders. Cash Genie faced a similar fate in January 2016 after being forced to pay £20m to customers who had suffered because of the lenders’ unfair practices.

Who is eligible for compensation?

The redress scheme will benefit some CFO Lending customers as well as customers who have applied and received loans in the past through the lender’s other brands like; Flexible First, Money Resolve, Payday Advance, Payday Credit, Paycfo and Payday First. 

According to Mr. Davidson, affected customers will be contacted by March 2017. Customers who believe they are entitled to redress but aren’t contacted by March 2017 are free to contact CFO Lending (via phone on 0203 583 6303) after March 2017. £31.9 million worth of debts will be written off under the redress scheme. A further £2.9 million will be paid to eligible customers in the form of cash payments. 

Customers with outstanding loans with CFO Lending are expected to continue repaying them, however, no additional interest or any other fees will be added.

For more information, visit: http://www.cfolending.com/redress-3

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
google payday loan ad ban

The True Impact Of The Google Payday Loan Ad Ban

In May 2016, Google announced that starting July 13, they were going to ban payday loan ads that featured a high-interest rate (an APR OF 36% or higher) and a repayment period within 60 days or less from the date of issue.

This wasn’t the first time Google had made such a move. In the recent past, Google has been cracking down on ”questionable” product/service ads. In fact, Google disabled 780 million ads in 2015 for many reasons ranging from phishing to counterfeiting and obscenity. After doing away with porn ads, the latest victims are payday loans among other high-interest financial products/services.

Critics argue that Google has overstepped their boundary in their quest to ”protect” consumers. Google thinks otherwise. During Google’s initial update on the matter in May 2016, David Graff, Google’s Director of Global Product Policy said the move was inspired by Google’s quest to protect its users from deceptive or harmful products only thus the update didn’t affect other types of loans such as car loans, student loans, mortgages, commercial loans and revolving lines of credit such as credit cards.

It’s worth noting that Google had previously taken steps aimed at limiting payday loan ads. These steps were deemed adequate and appropriate. The new update is unnecessary and counterproductive. As discussed below, it will end up increasing the cost of borrowing for users. The update also introduces unnecessary hurdles for lenders, especially those in countries like the UK which already have adequate payday loan regulations in place. The FCA already regulates the UK payday loan industry.

Payday loan industry players in the UK must follow the payday loan guidelines, regulations as well as advertising standards in place or face stiff fines and/or website bans. This makes the UK payday loan industry as transparent as possible to consumers. The only thing this new regulation does is rob UK payday loan consumers the freedom of choice which will in turn make payday loans more expensive since the minimum loan term has been extended. Google has set the minimum term to 61 days but in reality, only a minimum 90 day or 3 month payday loan will pass Google Adwords approval. 

This is the first time Google has announced a worldwide ban on ads relating to a broad category of financial products. Google’s move can be traced back to mounting pressure since 2015 from consumer protection and privacy groups as well as the coalition of civil liberties. Civil right groups such as the Leadership Conference on Civil & Human Rights have been very vocal about how payday loans exploit low-income individuals with aggressive but misleading campaigns. Many people believe this influenced the search engine giant to announce a total ban joining another tech giant, Facebook, which stopped displaying payday loan ads in 2015.

Implementation implications 

The move was, and is still, expected to undercut payday loan business whose clients originate mostly from the internet. It is, however, important to note that payday loan borrowers will still be able to find payday loan lenders via Google search which defies the reasoning behind banning payday loan ads in the first place.

To enforce this policy, individuals and companies wishing to market payday loans via Google ads will be forced to disclose crucial details about the loans in question i.e. the length/term of the loan as well as the yearly interest rate before being allowed to run ads. In addition, other lenders charging over 35% interest rate in the U.S. won’t be able to display ads going forward. The same applies to websites which connect such lenders and distressed borrowers.

Execution of the ban

Although Google announced the ban would be effective starting July 13, payday loans which didn’t meet the new criteria were still showing many days after July 13. It is accurate to say the ban wasn’t well thought-of. Although Google posted an update on July 20 stating that the high-APR policy on personal loans affects U.S. advertisers only, the policy on short-term personal loans is, however, global including the UK. 

Also, Google is not accepting payday ads and ads for high-interest loans going forward. Existing ads that meet these criteria will be removed from the system in a few weeks. Google hasn’t however given a definite date this time round acknowledging that the process may take longer than anticipated due to the number of existing payday loan ads, as well as the manual loan term checks, the search engine giant will have to conduct before deciding whether to approve or disapprove ads. 

Implications to lenders

Payday loan lenders stand to be affected negatively by this update given the fact that most borrowers learn about payday loans and apply for them through online payday loan ads. The update has also made competition impossible since all lenders are subject to a predetermined minimum term and interest rate. All lenders will be forced to advertise the same products going forward.

Also, Google seems to be favoring established payday loan lenders since such lenders already have established organic search presence and Google isn’t touching organic search ranking with the new update. This is yet another case of established businesses getting unfair advantage.

In regards to policy violations, lenders who violate the new ad policies face ad disapproval, domain disabling and/or account suspension. Ads which don’t meet the new policy guidelines won’t run until they are fixed. Google may also suspend websites which violate the policies openly which simply means such websites won’t be able to run ads until the problem/s are fixed. In case of repeated or serious violations, advertisers face a permanent Google AdWords account ban/suspension

Implications to applicants

Although Google claims the new update is meant to protect its users from being exploited by payday loan lenders, the update has introduced new drawbacks especially in the UK where payday loans are already regulated effectively. For instance, applicants will now be forced to borrow more over longer terms/periods i.e. more than 3 months which will increase the cost of loans for individuals who usually take payday loans for short time periods i.e. two weeks. Take this example;

Borrowing £100 for two weeks at 0.8% per day = £100 + (11.2% x £100) = £111.2

Borrowing £100 for three months (90 days) at 0.8% per day = £100 + (72% x £100) = £172

Holding loans for a longer time period is clearly expensive.

Applicants also don’t have the power of choice when selecting payday loans going forward since all lenders have to offer the exact same products. Applicants can only rely on Google search which will be promoting established lenders only with a high search ranking.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
Credit rating

Will Getting A Payday Loan Affect My Credit Rating?

Taking out a payday loan is an option for many people wanting to access cash quickly. Some might worry that taking out this type of loan could affect their credit rating in the future, but like any debt, providing that it is paid back in full and on time, there is typically no reason why a person’s credit rating would be compromised. In fact, taking out a payday loan and repaying on time and fully could even, in some situations, end up having a positive effect on someone’s credit score.

It should be noted that even though taking out a payday loan and complying fully
with the terms shouldn’t impact a credit rating, it may not be wise to take
one out if a person is intending on applying for a mortgage or other significant
borrowing method in the near future. Some lenders have shown that they look less
favourably on people with payday loans in their credit history, regardless of
whether they have paid them back or not.

Taking out a payday loan could signal to some lenders that someone has money
management issues and therefore applications for large amounts of cash over a
long period could be refused.

Proceeding with caution is probably the best advice. Some people might be
tempted to take out a payday loan as a way of boosting their credit rating but
this could be a gamble in the long term, particularly as credit reference
agencies now differentiate payday loans separately on credit files. This means
that serial payday loan borrowers can easily be identified by underwriters who
may decide the risk of lending is just too great based on previous payday loan
borrowing history.

On balance someone taking out a payday loan once and paying it back in full at
the agreed terms could be unlikely to suffer any damage to their rating.
However, those borrowing this way regularly could signal alarm bells with
lenders when it comes to making a big commitment like buying a house.

For those concerned about their credit rating it is possible to keep an eye on
how it looks by requesting the information from credit rating agencies. They may
charge a fee for doing this but it could be the best way of someone keeping a
close eye on their credit file. It is also worth remembering that applications
for credit whether successful or not are recorded so be mindful of making
numerous applications if the likelihood is they’ll be refused as this too
could be damaging.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.