Category Archives: Payday Loans

Unexpected Payments in Britain and How to Deal With Them

A new study by online lender MYJAR has revealed that unexpected payments have cost British citizens approximately £175 billion. According to the study which involved 2,000 participants, every adult Briton incurs £3,146 in unexpected payments over their lifetime. The study also reveals that the latest unexpected bill sets each Briton back £485 on average.

According to MYJAR’s spokesman, there are many studies on how much money people have, how much they save, etc. The study uncovers how unexpected payments accumulate over a lifetime to an incredibly high figure. The study also brings the importance of having an emergency fund to cover unexpected costs given that 50% of the respondents in the study stated that they were anxious about receiving unexpected bills. 10% stated they were extremely worried about receiving unexpected bills.

The study also revealed that the most common unexpected payments in Britain are absolute necessities such as expenses associated with a damaged washing machine or dishwasher. Parking ticket expenses are also among Britain’s top unexpected payments. The third most common expense is computer-related expenses followed by boiler, car damage, and dental surgery expenses respectively.

What’s more interesting is; more than 25% of all Britons adults have had to pay overdraft fees as unexpected expenses. This is a shocking statistic given the high fees associated with unexpected overdrafts. Pet related illnesses or injury also top the list of most common unexpected payments in Britain.

According to the study, Britons encounter unexpected payments at least three times a year, and 60% usually have no spare money to cater for the expense which forces them to spend money allocated for another expense. The study also revealed that 25% of Britons faced with unexpected payments struggle to pay bills that are £500 or more.

In an effort to take care of unexpected payments, most Britons turn to their savings, take short term loans like payday loans, borrow from friends and family or sell assets. From the study, it is clear that most Britons turn to friends and family first before taking short term loans or selling assets. 40% of the respondents in the study also stated that unexpected bills have left them struggling to cater for other necessities such as electricity, medical care, and gas.

Given the impact of getting unexpected payments, it’s important to forge a way forward. So, how do you deal with unexpected bills/payments?

Change your budget allocation: When you are faced with an emergency payment, your first step should be checking if you can change your budget allocation. If the expense is not as much, you can cut allocations from different expenses to raise enough money for the unexpected expense. You can slash your clothes, shoes or entertainment budget.

Split the cost: If the unexpected payment is too big to be catered for by re-allocating your monthly budget, you can consider splitting the cost over two months. Of course, this applies if you have the luxury of time to settle a payment. You can also choose to forgo something in your current budget for the next few months to raise enough funds to cover the expense.

Turn to your emergency fund: If you can’t change your budget allocation or split the cost, you can turn to your emergency fund. If you don’t have one, you should start thinking of setting one up immediately. Meanwhile, you can;

Take a payday loan: Payday loans are specially meant for taking care of unexpected payments/expenses. You can apply from a reputable payday loan broker like SwiftMoney to enjoy the best rates. Reputable payday loan lenders have the best lending practices as they are all authorised and regulated by the FCA. Apply online and get a payday loan within minutes.

Summary

Unexpected payments are increasing at an alarming rate in Britain. Most Britons worry about getting unexpected payments. Those that get them struggle to pay them. To avoid worrying about unexpected payments, you need to set up an emergency fund immediately if you don’t have one already. If your current emergency fund is inadequate, you need to refine your cash strategy and build a reserve that is capable of handling the most common unexpected expenses as well as other serious eventualities such as unemployment. Since you can never tell when you will be hit by unexpected bills, its better stay prepared.

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.

Is Your Payday Loan Provider Legal?

Getting a loan from traditional lenders like banks is not easy. This is one of the main reasons people prefer payday loans. Banks require collateral. You also need a good credit score. If you don’t have collateral and a good credit score, you need a guarantor to co-sign the loan agreement. Considering guarantors are hard to come by, it’s understandable why many people turn to payday loans today.

You don’t need security or a good credit score to secure a payday loan. It also takes less time and effort to get a payday loan. You can apply for the loan online and receive the loan amount in a few minutes. The benefits of payday loans are obvious. However, not all payday lenders are good. So, how do you determine if you are working with an authorised lender?

Scarce lender information

Most illegal internet payday loan providers in the UK have one thing in common i.e. they offer scarce information about themselves online. If you can’t get concrete information about a lender on their site, be cautious. All online UK payday loan providers must adhere to the same rules followed by their storefront counterparts. It’s not advisable to deal with any company online, let alone a payday lender, that doesn’t offer adequate information online.

Online payday loan lenders are required by law to provide their Company number as well as their FCA authorisation number. Most unauthorised lenders don’t provide such information. In fact, recent statistics from European Union investigations indicate that only one out five online payday loan companies in the UK provide basic lender information as required by the law. Unauthorised lenders who are only interested in making quick money and exiting the market have no business following legal channels. The lenders make it impossible to check their authorisations or credentials.

No infrastructure investment

It’s also worth noting that illegal lenders have no interest investing in infrastructure. For this reason, most illegal payday loan lenders don’t have a working call-center, physical address/permanent office, and staff. In a nutshell, you can’t visit or get into contact with the company in person if you want. The lender may have contact details that don’t work. All online companies can be traced to a physical address or location because they are started by individuals. Illegal lenders are untraceable because they have very little to no infrastructure investment on purpose.

Missing APRs

You should also be wary of payday loan sites that don’t highlight the representative APRs. The representative APR is arguably the most important lender information in any payday loan website since it highlights how much a borrower is expected to pay in interest. Any lender who doesn’t disclose this information isn’t transparent and will most likely end up overcharging you.

Expired information

Payday lenders also need to have up-to-date information for them to be considered legal. It doesn’t matter if a lender has interim permission or is fully authorised. The lender you are dealing with must have updated information. You can conduct a quick search on the FCA’s website http://fca-consumer-credit-interim.force.com/CS_RegisterSearchPageNew to ascertain this.

Inaccurate information

The information presented on the FCA’s website must also match with the information presented on the lender’s website. Most fraudulent payday loan providers pose as legitimate lenders. It’s, therefore, important to ascertain if the payday loan provider you are dealing with is a registered lender or broker.

Summary

To secure a payday loan, you have to submit sensitive personal information (such as your name and bank account) to your lender. For this reason among many others, you can’t afford to deal with a fraudulent provider. Luckily, there are many signs to look out for when you want to identify fraudulent providers. One, most fraudulent payday loan providers offer scarce information on their website. If you can’t get adequate information about the payday loan provider, their terms and conditions, interest charges etc., think twice. You should also beware of payday loan providers who don’t have any infrastructure investment. The validity and accuracy of information is also important. Expired and/or inaccurate information is a sure sign of trouble. All in all, you must do your research and understand the risks of dealing with online payday lenders.

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.

How to Launch a Payday Loan Complaint

For a payday loan complaint to be launched, there must be some form of wrongdoing. With that said, you need to know your rights as a payday loan borrower. Complaints should be launched when you have a problem with a lender or when you have been mistreated.

Although payday loans are great for emergency cash needs, it’s easy for borrowers to be trapped in downwards spirals of debt. Payday loans are high-cost short-term loans which can easily get out of control when they are not paid within a month. In fact, most of the complaints the Financial Ombudsman Service (FOS) receives about payday loans revolve around cost.

There are also complaints about unfair lending terms. Some lenders have also been accused of coercing their clients to repay the loans. The latest statistics indicate that the Financial Ombudsman Service received 7,375 payday loan related complaints between April and September 2016. The FOS has been receiving about 7,000 payday related complaints per year indicating a sharp increase.

This is despite the regulatory controls put in place by the FCA. The FCA has also been cracking down irresponsible lenders in the UK. Nevertheless, payday borrowers continue to suffer. There are still many irresponsible payday loan lenders operating in the UK. So, how do you proceed if you fall victim to an irresponsible lender?
Many payday loan borrowers are aware of their rights now more than ever because of the recent focus on rogue lenders. Here’s a quick guide to launching a payday loan complaint.

When should you launch a complaint?

You should launch a payday loan complaint when; you start having problems affording your loans. For instance, if you struggle to afford a payday loan which appeared affordable initially, you have a right to launch an official complaint. Payday loan lenders are bound by law to give payday loans only to those people who can afford them. It’s also within your right to complain if your lender takes out payments unexpectedly from your account. Borrowers can also complain if they are harassed to make repayments. There are many other cases where you are entitled to complain. For instance, if you feel the lender didn’t adhere to the FCA interest and fees cap, you can also launch a formal complaint.

The process

Write a complaint letter to your payday loan lender.
To launch a payday loan complaint to the Financial Ombudsman Service, you have to inform your lender first in writing. You can also use online complaint tools like resolver.co.uk. On receiving your formal complaint, your lender has eight weeks to respond to your complaint. If they don’t respond or take appropriate or satisfactory action to resolve the issue, you are free to escalate the issue to the FOS.

The FOS has legal mandate to assess and provide independent decisions on payday loan complaints in the UK. You can reach the FOS by phone (0300 1239 123 or via its specialised page for payday loan complaints: http://financial-ombudsman.org.uk/keeps-you-awake/index.html)

The FOS offers payday loan complainants FREE services.

Compensation

The FOS is at liberty to decide if you are eligible for compensation based on the nature of your payday loan complaint. Compensation can come in many forms i.e. more time to clear your loan if you have been treated unfairly. The FOS can also recommend monetary compensation if you have been overcharged.

Recommendation

To avoid being a victim of rogue payday loan lenders, it’s important to borrow from reputable payday loan providers only like SwiftMoney. Reputable providers don’t overcharge their clients or subject them to unfair terms.

It’s also important to familiarise yourself with the rules. The FCA website has all the information you need to know about payday loan price caps. The website also has information on how payday loan lenders are supposed to conduct themselves.
The FOS website also has all the information you need about launching complaints. http://financial-ombudsman.org.uk/keeps-you-awake/index.html

It’s also advisable to seek financial help if you have financial trouble. Over reliance on payday loans every month is a sure sign that you need financial help. There are many free debt services in the UK you can talk to like stepchange.org, citizensadvice.org.uk and nationaldebtline.org.

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.

What Are The Best And Worst Ways To Use A Loan?

It’s always advisable to live within your budget, stay away from debt, etc.. However, there are some cases when it’s justifiable to take on debt. Sometimes it’s inevitable to take debt. When you have an emergency expense for instance (such as an unexpected medical or car repair bill), you may be forced to take a payday loan or any other type of short-term loan. It’s a bad idea to take up a loan if you don’t really need one. With that said, let’s get into more detail on the best as well as the worst ways of using a loan.

Best ways of using a loan

1. Starting a business:

It’s highly recommendable to take a loan and start a business. Business loans make the most sense because they are put into one of the most productive loan uses. Provided you prepare a solid business, it’s always a great idea to use your loan to start a business.

2. Debt consolidation:

You can also take a loan to help you manage your debt better. Managing debt can be stressing when you have many loans. Debt consolidation allows you to clear off multiple debts so that you remain with one manageable loan. If your loans have gotten out of hand, it’s a good idea to consolidate as long as you still have the capacity to service the resulting debt.

3. To build your credit score:

You can also take a loan to build your credit score. If you have a bad credit score that needs to be improved fast, taking a loan is a good idea. The benefits of having a good credit score are enormous. As long as you can repay your loan in time, there is nothing wrong with building your credit score by taking loans and repaying them in time. This tip works perfectly with credit card loans/debt.

4. To cater for emergency expenses:

As mentioned above, you can take a loan to cater for emergency expenses. Medical bills, car repair bills, roof repair bills among other kinds of bills may arise when you don’t have money. In such cases, you can take a payday loan among other types of short term loans to cater for those emergencies.

Worst ways of using a loan

Let’s turn to what you shouldn’t do with loan money. Ideally, you shouldn’t take in debt to spend on unnecessary expenses. Although the definition of ”unnecessary” expenses can vary from one person to another, here’s what you need to know.

1. Never take a loan for gambling:

Gambling is very risky. The odds are usually against you. There is nothing wrong with gambling with your own money if you really want to gamble. However, it is not advisable to get into debt because of gambling. In fact, you should avoid taking loans to engage in any activities whose outcome can’t be controlled.

2. Funding luxuries:

You should also avoid loans if you are taking them to fund luxuries i.e. buy the latest furniture, electronics, go for a holiday, buy a second home, buy new clothes/shoes. Most people get into debt because of taking loans to enjoy lifestyles they can’t afford. To avoid this mistake, fund luxuries using your own money. You can take a loan if you already have the money to fund luxuries. For instance, you may be waiting to get paid. Unless you are in such a scenario, avoid debt by all means. If you can’t afford something at any given movement, save up and get it later. You should, however, consider putting your money into better use i.e. funding income generating ventures such as a business.

3. Paying everyday bills:

It’s also a bad idea to get into debt every month to pay rent, energy bills, grocery bills, etc. You can take a payday loan once in a while to sort out expenses when you have some financial difficulties. However, it’s not a good idea to pay for everyday bills with debt. If you find yourself doing this, it’s time to adjust your lifestyle to match your income. It is possible to avoid short-term loans by living within your means and building a savings account.

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.

How to Avoid Payday Loan Scams and Unauthorised Firms in the UK

The FCA has gone to great lengths to regulate the conduct of finance industry players in the UK. In an effort to protect consumers, the FCA has a guide that is bound to help you avoid being scammed and/or dealing with unauthorised firms.

The consequences of dealing with unauthorised firms are dire. For instance, individuals who conduct business with unauthorised firms aren’t covered by the Financial Services Compensation Scheme or the Financial Ombudsman Service in case anything goes wrong. To avoid losing your hard earned money, it is important to avoid unauthorised firms. Furthermore, most scams are orchestrated by unauthorised firms.

This leads us to a very important question; how do you avoid scams and unauthorised firms in the UK? Below are 10 important steps to consider according to the FCA.

Step 1: Don’t accept cold calls

You should treat cold calls with extreme caution to avoid being scammed or dealing with unauthorised firms in the UK. Ideally, you should not pick cold calls and if you do, hang up immediately. It doesn’t matter how attractive an investment sounds, most scammers cold-call potential clients. They may also email or text you. For this reason, never open or respond to unsolicited correspondence. It is possible to set protective mailing and telephone preferences to keep you safe.

Step 2: Check if the firm you are about to deal with is registered or authorised

This has to be the easiest but most overlooked way of avoiding scams and unauthorised firms. You shouldn’t deal with any firm that isn’t authorised or registered by the FCA. The FCA has a register (https://register.fca.org.uk/) that lists firms as well as individuals that are authorised or registered to conduct business in the UK. It is advisable to access the register directly from the FCA website as opposed to clicking links in emails for security reasons.

It’s also advisable to beware of registered firms which don’t volunteer adequate information to the FCA since firms aren’t obligated to provide a lot of information about their business. When confirming the identity of any authorised firm on the FCA register, ask for the FRN (Firm Reference Number) as well as the contact details. It’s also good to call the firm back using the switchboard number on the register as opposed to any direct line they may offer you. If you can’t find contact details or the firm claims the details are outdated, call the FCA consumer helpline (0800 111 6768) for help.

Step 3: Check the FCA list of unauthorised firms

FCA has a special list (https://www.fca.org.uk/consumers/unauthorised-firms-individuals) containing all unauthorised firms. To avoid being scammed, make sure you check if the FCA has blacklisted the firm or individual/s you want to conduct business with. The FCA list contains all firms as well as individuals that the FCA has received complaints about. Although the list changes regularly, the FCA adds new firms and names as frequently. Please note that you shouldn’t assume that the firm or individual you are about to deal with is legitimate simply because they are not in the FCA list. The firm/individual may not have been reported to the FCA yet.

It’s also worth noting the FCA has another list (a warning list) http://scamsmart.fca.org.uk/warninglist/ that contains names of individuals and firms that contact people unexpectedly about investment opportunities. You can use this list to see the kind of investment opportunities, firms and individuals you should avoid.

Step 4: Conduct additional checks

Today’s scammers use tactics that keep evolving so don’t stop even after checking the FCA’s list of unauthorised firms. For instance, you should investigate the firm’s website using Companies House (https://www.gov.uk/government/organisations/companies-house) or directory enquiries to ascertain if the firm has issued the correct details on their website.

Step 5: Be cautious of cloned firms

Most scammers pretend to be subsidiaries of a company authorised by the FCA. The scammers usually claim to be overseas firms authorised to conduct business on behalf of FCA authorised firms. Beware of such firms (commonly referred to as cloned firms). To avoid being scammed by cloned firms, check the website of the authorised firm to confirm if the firm has subsidiaries or authorised partners.

Step 6: Stop sending money immediately

If you have already started conducting business with a firm but start getting suspicious that you are being scammed, stop sending money to the firm or individual in question immediately. If you have already surrendered your bank account details, inform your bank immediately.

Step 7: Beware of overseas firms

Most scammers today will present themselves as overseas firms making it hard for you to check and ascertain if they are regulated. Luckily, the FCA has compiled warnings from foreign regulators here: http://www.iosco.org/investor_protection/?subsection=investor_alerts_portal. These warnings are about foreign firms operating illegally and/or scamming people in the UK. Before dealing with any overseas firm/scheme, find out how that firm/scheme is regulated.

Step 8: Report unauthorised firms

If you suspect you have been dealing with an unauthorised firm, contact the FCA immediately through their consumer helpline number (0800 111 6768). The FCA has a reporting form that allows you to report as much information as possible about the ”suspect” firm or individual.

Step 9: Be cautious about further scams

Scammers take advantage of the fact that individuals who have been scammed will want to get their money back. As a result, beware of individuals or companies that call to assist/help you get your money back.

Further scams can assume many forms. For instance, you may be offered another deal that comes with some fees that must be settled before you can get your money back. You can also be threatened with some legal action if you request for a refund or stop sending money. Scammers also ask for personal information such as bank account details for them to send you a refund. Instead of getting back your money, the scammers can attempt to steal your funds and/or sell your personal information.

Step 10: Don’t forget about fake liquidators

The FCA has received numerous reports that scammers are impersonating liquidators/claiming to represent legitimate liquidators. Such scammers usually charge a fee, tax to sell/release/return your investment. You may also be asked for an upfront payment. Avoid such firms/individuals by all means. You can find legitimate liquidators by clicking here: https://www.gov.uk/find-out-if-a-company-is-in-financial-trouble

Summary

Although there may be other steps to follow when you want to avoid fraudsters and unauthorised firms in the UK, the above steps are the most important according to the FCA. If you follow them to the letter, you don’t have to worry about being a victim of any financial scam in the UK.

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.

Donald Trump Wants To Scrap The Consumer Protection Agency, What Does This Mean For Borrowers In The US?

US President Donald Trump is facing immense pressure to get rid of America’s consumer protection agency CFPB (Consumer Financial Protection Bureau). This is according to the man set to head the agency. If this happens, rogue debt collectors, loan sharks, and payday lenders will have unmatched freedom to rip off American borrowers.

According to Randy Neugebauer who is slated to replace the current CFPB Director, President Trump is facing immense pressure from the Republican Party to break up the agency completely. The former Texas congressman held talks with the then President-Elect Trump shortly after his election victory in November.

While speaking to The Independent exclusively in his 1st interview since the new Trump administration took office, Mr. Neugebauer stated that his meetings with President Trump have involved discussions revolving around deregulating as well as gutting the CFPB.
Mr. Neugebauer went ahead to state that some of his colleagues are in favour of doing away with the agency completely. He is however of the opinion that it’s better to change certain aspects of the agency as opposed to doing away with the agency completely. Mr. Neugebauer feels that the government shouldn’t be telling the public what types of financial products are the best but rather, creating a safe environment where the public is safe from unfair lending practices.

This is where the CFPB comes in. The agency has the power to take any necessary action against companies which break the law. The agency also takes on cases revolving around race or age discrimination.

Under Mr. Neugebauer’s watch, the agency’s current form is likely to be dismantled which may result in the agency losing much of its influence. Mr. Neugebauer claims that American consumers are currently being suffocated by regulations. He prefers a consumer environment where consumers have the freedom to choose the loans they want whether the deals available are good or bad.

Mr. Neugebauer has stated that he is willing run the agency if appointed. However, it will depend on what the long-term plan of the agency will be. Although Mr. Neugebauer admits to having had broad discussions with President Trump, he goes ahead to state that he hasn’t discussed any specific job offer with the president.

Mr. Neugebauer has been on the record voicing his support for payday loan lenders, despite the apparent lack of transparency as well as crippling interest rate charges that have contributed to calls for payday lenders to be banned.

He also backs President Trump’s executive order aimed at reviewing the 2010 Dodd-Frank financial regulations. Mr. Neugebauer states that the Obama administration rules meant to get rid of risky lending practices were an overreaction. Mr. Neugebauer views the current regulation as blanket regulation meant for the whole financial market yet some entities weren’t part of the cause of the financial crisis that warranted the 2010 Dodd-Frank financial regulations. In his opinion and those of many others, the regulation went too far.
Under the current CPFB director Richard Cordray, customers who have been victims of credit scams or unfair banking sector practices have received billions in compensation. However, Mr. Neugebauer claims that the problem was overstated and individual states were doing a better job when compared to the CPFB.

He admits to the fact that there are people who will always try to abuse the system, however, action can and has been taken against such people.
Furthermore, the CFPB is already under threat given the federal appeals court ruling in October that the agency has an unconstitutional structure. The ruling also gave President Trump the power to dismiss the current director at will and appoint his replacement anytime even before his term ends in 2018.

The agency which came into being after the 2010 Dodd-Frank reform law was enacted is among former President Obama’s main domestic policy achievements. The achievement is, however, unpopular with libertarians who think it has resulted in unplanned long-term commitments that shifts from the initial objective. Most libertarians feel the agency should either be reformed or disbanded.

A bill has already been introduced by Representative John Ratcliffe and Senator Ted Cruz to disband the agency. If the bill is passed prompting the disbandment of the CFPB, the move will be hugely controversial. Many banking sector players have warned against such a move claiming it will do more harm than good.

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.

The FCA ”killed” Payday Loans But What Has Come After Appears To Be Just As Bad For Borrowers

Many people in Britain applauded when the FCA (Financial Conduct Authority) put an end to Wonga-style payday loans back in 2015. Fast forward two years later, the applause is over. In fact, fear has set in over whether the FCA’s payday loan assault has resulted in a new uncontrollable headache for borrowers.

The FCA has gone as far as launching an investigation on the impact of the payday loan cap on borrowers. There is evidence from numerous industry sources (debt charities and industry groups) suggesting that there is an increasing number of people who have been completely locked out of the credit markets or have been forced to turn to high-cost loans.
According to Jane Tully, Director of External Affairs at Money Advice Trust, it is possible to ”regulate away” supply but you can’t ”regulate away” demand. Simply put, the FCA’s actions only dealt with the supply of payday loans (payday loan lenders) but didn’t think about the effects on borrowers.

According to Tully, payday loan problems have been displaced. There are many people today who are accessing many other forms of high-cost credit because they have no option. Such people have a higher chance of falling into debt now more than ever.

Although the FCA payday loan cap was designed solely to tighten lending practices as well as protect borrowers, the cap has had negative effects such as killing the supply of payday loans. This has, in turn, left many people with fewer suitable short term loan options.

Before the cap, the payday loan industry had two main industry players namely; Wonga, and Dollar Financial. These dominant payday loan lenders are in the process of being forced out of the payday loan lending business.

Wonga’s revenues dropped by a record 64% in 2016. Dollar Financial has already closed hundreds of Money Shop stores and put their payday loan business up for sale.

According to the CFA (Consumer Finance Association) C.E.O., Russell Hamblin-Boone, the payday loan industry markets to a higher demographic, however, this has attracted some unforeseen consequences. The CFA represents twelve of the biggest payday loan lenders in the UK.

According to recent consultations carried out by the FCA, there is a sharp increase in the number of UK citizens missing their utility bill payments in the past two years.
According to debt charity; StepChange which focuses on individuals facing financial distress, over 40% of all its clients miss one or more bill payments every month. StepChange has also discovered that 34% of all individuals who are denied payday loans turn to other types of short-term credit.

According to StepChange’s policy adviser, Laura Rodrigues, those people who miss bill payments state that they don’t have adequate money to cater for all their major expenses. Rodrigues also recognises the fact that there is a gap in the market that has been created by the FCA cap. There are few suitable alternative forms of short-term credit which exposes possible FCA social policy issues.

According to the Consumer Finance Association, approximately 600,000 people struggle to get short-term loans in the UK as payday lenders continue exiting the market. The apparent squeeze on short-term credit supply has also forced people to fall into the hands of unscrupulous lenders now more than ever before.

Individuals who have been shut out from accessing short-term loans because of the tighter affordability checks have been forced to turn to high-cost credit products such as logbook loans, unauthorised overdrafts, guarantor loans, etc., which aren’t price capped or haven’t undergone serious regulatory scrutiny. According to the FSCP Chairman, Sue Lewis, the same protections applying to high-cost short term loans should apply to all other types of credit.

Although influential groups like the Financial Services Consumer Panel (FSCP) which advice the FCA have requested the government to regulate these types of loans the way payday loans are regulated, nothing has been done so far. The FCA, however, plans to lay out a post-cap policy this summer.

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.

What Questions Should You Ask Before Taking A Loan?

Many questions linger in the minds of borrowers before they take loans. When you consider the implications of taking a loan and being unable to repay it, it’s important for every borrower to be properly informed from the onset. In case you are wondering what you should ask yourself and your bank before you take a loan, here are important questions to consider.

1. Do I really need a loan?

It’s easy to get a loan nowadays, so it’s crucial for you to ask yourself if you really need one. Banks advertise loans all the time. However, you need a better reason to take a loan. If you don’t have a reason of your own, let your bank give you a good reason. Some banks have business loan programs meant to provide people with business loans as well as the expertise needed to set up prosperous businesses. If you’ve always wanted to start your own business, you can consider such a program.

2. What type of loan is the best for me?

You should ask yourself and your banker this question before you decide to take a loan. This question is important since there are many types of loans ideal for different purposes. For instance, a payday loan is perfect for emergency expenses. However, it’s not handy for starting a business. Personal loans also have notable benefits over business loans and vice versa. Depending on your reasons for taking a loan, your banker should be best suited to suggest the best type of loan for you. Nevertheless, you should be able to assess if the type of loan you are about to take is actually the best type of loan for you. You can assess things like interest rate charges among other repayment requirements i.e. the term of the loan to decide if the loan in question will work for you.

3. What’s the total cost of the loan?

This is another crucial loan question to ask yourself and your banker. It’s worth noting that loans are usually structured in terms that can be difficult to understand. Some lenders actually do this on purpose. The chances of a loan being more expensive than you actually think are very high so, make sure you find out the actual cost. You should do your own calculations if you have to or ask your banker to do the same on your behalf. This question is very important since the actual cost of most loans is usually hidden in confusing financial jargon. Don’t take chances. Know the total cost of any loan beforehand otherwise, you won’t be able to make an informed decision.

4. What happens when I repay early?

It’s also crucial to find out if there are any penalties if you repay your loan early. Most lenders don’t want you to repay your loan early since they earn most of their money in the form of interest income. It’s usually in the best interest of banks for borrowers to service the loan for the entire term. To discourage early repayment, banks usually have penalties. Although most banks disclose these penalties, some may hide them in the fine print. It’s crucial to find out if there are such penalties and when they apply if you are interested in repaying your loan faster.

5. What documents do I need to provide?

To get your loan amount in record time, you need to ask yourself and your bank what documents you need to provide to qualify for the loan in question. Business loans require business documents ranging from licenses to financial reports. Personal loans require bank statements, pay slip/income information, etc. Since different lenders tend to have different requirements, find out the type of documents you need in advance and provide them with your application to reduce the time it takes for your bank to process your loan.

Summary

You shouldn’t take a loan because everyone else is taking one. You shouldn’t assume the total cost of your loan either or take any loan that comes your way. It’s also important to know all the requirements for qualifying beforehand to avoid wasting time. Loans come with many requirements, risks, and costs that you should be aware of before committing yourself.

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.