UK payday lenders are brilliant at telling you what they want you to hear. What makes far more interesting reading is what they DON’T want you to know!
The following article has been designed to highlight the 5 things that they would rather you didn’t know to help keep your money in your pocket.
1. You Could Actually make a Bad Situation Worse
Although payday loans do have the ability to offer an effective short term fix, they can make financial problems significantly worse if payments are not made on time.
Inevitably for many people, this leads to a situation where, believing that they have no other option, they need to borrow more money to repay the original, and more, and more until the payments and charges have reached a level which can have long term effects.
If you find yourself in this position, check out the following money charity Step Change guide to the “5 Steps to Escape from Payday Loans”.
How do I get out of payday loans? Find out in 5 steps
2. Your Lenders will be able to Access your Account at will
The majority of lenders will gain access to your bank account through CPA (Continuous Payment Authorities) which can result in payments being taken without the required balance being available. This can lead to additional problems including charges from your bank.
Find out your rights when cancelling a continuous payment authority and what to do if your bank does not allow you to do this through the following FCA (Financial Conduct Authority) article – Continuous payment authorities: it is your right to cancel.
Continuous payment authorities: it is your right to cancel
3. There are Many Available Options
Despite the very effective advertising regarding this type of specialist finance, they are not the only available option if you have a poor recent financial record and better alternatives DO exist.
A quick glance at an advert from one of these ‘sub-prime lenders’ could easily convince a borrower with a history of mounting debt and missed repayments that they only have one realistic option available to them. However, this is not the case.
There have never been more available options and by taking the time to shop around, you will quickly find that you may be able to borrow money at a far more affordable rate.
4. There Will be Repercussions for Missing Repayments
Although we all expect there to be repercussions for missing repayments, we would not expect our bank or building society to take some of the extreme measures that payday lenders have been reported for.
As reported in the BBC article, if you do not repay your loan as scheduled, you may be pestered or intimidated by your lender.
10 things you need to know about payday loans
To further enhance these claims, the Metro reported findings in the following article titled:
“In 12 per cent of cases lenders pestered people with phone calls and texts rather than accept offers of payments that borrowers could afford.”
Payday loan borrowers urged to ‘fight back’ against unscupulous lenders
5. Slow Customer Service
Whilst the application process and receipt of funds is often very fast, experience tells us that customer service is often far slower.
This is backed up by a Citizens Advice Bureau article which claims that as many as: