How to choose a Payday Lender

You’ve found a Comparison Site but now how do you choose the Payday Lender?

It wouldn’t be wise to simply pick one based upon how attractive their website looks, or how many TV Ads you see for that company. Consumers are best advised to do some research into the Lender they want to use. Why? The company you choose will have access to your financial information – and Bank Account. So review first.

When choosing your preferred Lender, use the comparison sites filters to help you decide. LenderSeekers.co.uk have a uniquely wide range of filters to help you – use them don’t use them, but make sure you review the Lenders. Is it important that you do not enter into an agreement whereby the Lender uses the Continuous Payment Authority service? Then using a filter, you can exclude those lenders that insist upon using it, leaving only those that do not.

The same applies to any of the other criteria the filters work with. A useful tool – so look for Comparison Sites like LenderSeekers.co.uk that offers filters.

Of course, it should end there. You should do a quick Google search and see if there are any negative reviews floating about; with regards to these, a good Lender would respond to any negativity and address it, so read a Lender’s responses, they can reveal a lot about the company’s ethos.

Finally, be careful out there – we would advise against accepting loans from cold callers; often these are fraudsters pretending to work for a legitimate company. A legitimate company will have a warning on their website if their name is being used inappropriately and any advice they offer should be heeded. We would recommend you apply online via the Lender’s application form.

This Blog was brought to you by LenderSeekers.co.uk

Comparison Sites for Short Term Loans

Why a Comparison Site, what advantages does it offer?

The answer is simple. When you use the services of a comparison site such as LenderSeekers.co.uk, you have access to a list of Lenders in one place and these Lenders are featured for the following:

1.       The Lenders are all verified.

2.       The Lenders are all Licenced and Regulated by the Financial Conduct Authority.

3.       The Lenders are all members of a Trade Association.

This means that if you apply to any of the Lenders on LenderSeekers.co.uk you can be assured that you are dealing with a reputable Short Term Loan company that can directly fund your loan – and not a Broker or an unlicensed organisation that is unregulated.

In addition you can often find filters on Comparison sites that will help you choose which Lender you want to make your application to; on LenderSeekers.co.uk they offer a wide range of filters that you can choose from. You don’t have to, of course, you can simply read about each Lender individually and make a decision based upon what they offer but should you want to, you can filter specific requirements that you have to ensure that only those Lenders offering those will remain for you to choose from.

A good payday lender comparison site service will also provide you with an affordability calculator so that you can work out your expenses before applying so that you know what amount you can comfortably afford to borrow. There will also be a wealth of information concerning short term payday and instalment loans to keep you in the know about how they work and what to watch out for.

This Blog Post was brought to you by www.lenderseekers.co.uk.

WARNING: Late repayment can cause you serious money problems. For help, go to www.moneyadviceservice.org.uk

Caps on Payday Loans: will new APR’s affect payday lenders pockets?

The payday loans cap has been implemented, but it is still too early to be able to say what the effect will be on the payday industry.

Theories abound, for example, there are those who say the caps will be positive in helping the short-term loan sector to grow while others say the caps will be instrumental in putting payday loans lenders out of business. Already some of the small payday lenders have shut shop but the big players are surging ahead. It seems evident that big payday lending companies will manage to survive a drop in the annual percentage rates (APR’s) to as far as 1,2000 percent. It is believed that this APR drop will have a negligible effect. With the new APR, borrowing an amount of 200 pounds will mean a drop of only 1 pound.

Policis, the USA based consultancy, reports that payday loans caps in the United Stated caused the credit supply to fall, but the demand remained the same. The question is, what happens when the demand outstrips supply? Naturally, a black market will emerge. With the payday loans industry moving online in the USA business is doing better than ever. Many of these online shops are lending illegally or are unlicensed. Policis is warning against clamping down on the payday loans industry because, as they see it, the tougher the regulations the more lenders will start operating on the internet. It is a fact that it is extremely difficult to police the internet.

In Britain, almost 80 percent of unsecured short-term lenders operate online. The Financial Conduct Authority (FCA) is aware that payday loan caps might limit access of funds to UK citizens but have what they say is a reasonable solution to the problem. According to the FCA, if you don’t have access to credit and can therefore not borrow money, appeal to friends and family.

Payday loans caps in Britain

Back home, the problem is far from being resolved. Where does one access credit and what alternatives are there to payday loans? There are not, it seems, viable solutions. Credit Unions do not have the infrastructure nor the funds that payday companies have and are therefore unable to lend money the way payday lenders loan money. Microfinance companies or organisations are in the same boat. The Church of England has created a credit union that has been useful but neither do they have the resources that some of the large payday companies have.

The British citizens are in need of financial services that are responsive and flexible. Wages are clearly not sufficient so one idea is to raise the minimum wage and teach people how to set a budget and stick to it!

Payday loans have their place in society and it would be good to see them being used for what they were created for.

A payday loan employee mans the telephones

Grant is the customer services manager of a payday loan company. His job is to contact customers who have defaulted on payment, or not made any payments at all. He runs the call center. When I arrive I am shown over to Grant’s desk. He waves me to some chairs and I sit down. However, not before I notice 3 sides of A4 paper covered in numbers which I assume are there for Grant to call on.

As I sit and wait for Gant to finish up whatever it is he is doing, I take a look around the office. There are eight other people who seem to be doing the same thing as Grant. I listen in on one of the phone conversations. The payday loan employee obviously calls someone who owes the company money. The telephonist is patient and calm.

“Hello, who am I speaking to? Ah, can I speak to Mr. C? Is that your Father? Oh, is he in the kitchen? Please, could you ask him to come to the phone? Where did he go? But you said he was in the kitchen two seconds ago. Ok, so he went out. Thank-you, can you write down this phone number for me … and ask him to call back when he gets home.”

It is clear that it will be difficult to get this particular customer to pay back his loan.

A Payday loan employee: It’s all in the approach

This particular payday loan company employs about 15 people. It is a small company and approves approximately 3000 loans a month. These loans are never more than 500 pounds, and of course, at the end of the month, at payday, this is when the telephone wires glow hot as the employees start calling in collections. One would think that the anxiety and stress levels would soar, but here the payday loan employee is calm and friendly. There is no frustration, anger or slamming of phones. Grant is proud to explain that they do not use the services of debt collectors, and he claims that the company has only ever once had to take a defaulting client to court.

Grant tells me that it is important to know what you are dealing with. This payday company serves a specific demographic. Their average client is 32 years of age, and 80 percent of the clientele fits between 23 and 40 years of age. The customer they most like to do business with is someone who earns approximately 21 000 pounds a year. Grant explains that the company tries not to let people over-extend themselves, thus creating a greater opportunity to end up defaulting and in debt.

The Company’s chief executive explained that people under the age of 23 should not be taking out payday loans. They should rather try the Bank of Mum and Dad. He went on to explain that of all the company’s customers 65 percent fell in the category of those who borrow and pay back timeously. Then there is 10 percent who end up in real difficulty and will probably go bankrupt. Lastly there is the 25 percent of borrowers who can’t pay the loan back in one go and need a little help with.

Grant, the perfect payday employee

Grant tells us that he works standard hours, so he has ample time to spend with his family in the evenings and at the weekends. He uses his spare time at the gym and likes to run. His salary is in the range of 25,000 pounds a year.

The best thing about work for him is the people he works with. The worst thing is dealing with the odd aggressive customer who is struggling with debt but is not interested in co-operating to find solutions.

Across the pond: We take a look at payday loans for low-income users

 

The payday loans dilemma seems to be consistent the world over. In any country, the companies that fork out a quick loan to just about anybody are currently under siege. These loads have different names all over the globe. From title loan, to short-term credit loan, to an emergency loan, but the most common description for these loans is the ‘payday’ loan, and according to different authorities, payday loans for low-income users. I think we all know what the payday loan was designed for, and that it was meant to live up to its name. A loan to tide you over until you get to your next pay check. A quick loan that obviously comes with a hefty interest rate, fees, and charges. A payday loan is a loan that was never meant to be paid off over months, and that is where the problem started. People began to see payday loans as credit for low-income users and these users have difficulty repaying a loan, let alone the electricity, rent, or supper.

Are payday loans for low-income users doing more bad than good?

While addressing the population of Birmingham, Alabama, President Barack Obama said:

“The idea is pretty common sense: If you lend out money, you have to first make sure that the borrower can afford to pay it back. But if you’re making that profit by trapping hard-working Americans into a vicious cycle of debt, you’ve got to find a new business model.”

Our cousins on the other side of the Atlantic are not much different than us. Here in the UK we have seen the FCA (Financial Conduct Authority) take the reigns of the short-term payday industry, passing across the board regulations that will ultimately be beneficial for those payday companies that have been approved. Competition is actually being generated. In America, Federal Government has begun to compile a set of regulations that will apply country-wide in comparison to each state for itself. At the center of the CFPB (Consumer Financial Protection Bureau) is a set of regulations requiring payday lenders to verify that the customer have an income that allows repayment of the loan. This stops payday loans for low-income users to spiral out of control, landing in the debt-trap that the president speaks out against.

Do payday loans affect low-income Americans? Or can the economy take some of the wrap?

According to by the Washington-based think tank, Urban Institute, around 2.5 million households took out a payday loan in 2013. Since that time, the number of loans taken out by Americans has risen by 19 percent, even though unemployment has fallen and the economy is busy bouncing back. On average a single borrower brings in less than 23 000 dollars, which is well below the poverty line. 80 percent of loans are rolled over of renewed incurring more fees. Over 12 months, on average more than half of the total borrowers had more than 10 loans and had rolled over existing loans or borrowed again.

Are payday loans designed for those living in poverty?

The answer is no, and the fact that the poor have no choice than to approach payday lenders for financial relief says a lot about the economy that has made such a brilliant come back. Don’t mistake a payday lender’s store for the welfare queue.

Am I responsible for my payday loan debt? Who can I blame when I can’t pay my debt?

Who is responsible for my payday loan debt? Am I responsible? This is a common and controversial question often asked in the credit sector in the UK. For over ten years, the payday lenders have been in the firing line and have wrestled with the Financial Credit Authority (FCA) and the Ombudsman. The members of the public who have over-borrowed have appealed to the ombudsman and FCA because they are unable to pay back loans and the rolling over of interest becomes impossibly high.

Politicians have joined the fray and the Church is now in the mix. Payday lenders have to contend with a tarnished reputation and a few payday lenders have been in the spotlight for shady business practices.  Some unfortunate people have taken out multiple loans in an effort to pay off one loan with another loan and there is general sympathy for them. But, let us cut through the hype:

You and you alone, are responsible for your payday loan debt!

You should not have taken out the payday loan if you could not pay it back.  Payday lenders are now required to thoroughly check your credit rating before they lend you any money. Payday lenders must also cross-check with other payday lenders to make sure you don’t have loans piling up all over the country. Even if you apply online you will be checked before you are approved for a loan. If, after all the checking, you are approved for a payday loan that you cannot afford, there is only one person responsible and that is you.

It is impossible to payday lenders to get it right every time. Often, when people are applying for loans they are desperate and may hide the truth.

Payday loan scams

Unfortunately, if you get caught in the net of a payday scam by dealing with lenders who are not legitimate registered lenders you have only yourself to blame. Mainstream legitimate lenders offer upstanding products. It is incumbent upon you to do your own checking. Make sure the lender you propose borrowing from is registered and if necessary check with the FCA to ensure the company is legitimate. For those of you who do not have a payday coming up, don’t borrow money since you will probably not be able to pay it back.

Payday lenders offer short-term unsecured loans on the understanding that they will be paid back on your next payday. They are genuine lenders willing to loan you money in your time of need but they are not your family or friends, they are in business and they must be paid back on time. Before taking out a loan make sure that you are able to repay the loan and that you are dealing with a registered lender.