Payday Loans3

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Short term lending business Availability of
affordable loans in UK
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charged interest

•  Historically many lenders, like the famed Wonga,
  charged interest rates exceeding 5,000 APR on
  these payday loans. At no point in our countrys
  history such heavy interest rates were seen.

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number of complaints

• Not only this but also a huge number of
  complaints were received where the customers did
  not get a loan and still their bank accounts were
  charged with heavy fees.

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Interest rate

• The interest rates charged on payday loans cannot
  exceed 0.8 per day. This brings down the overall
  APR and limits the ability of payday lenders to
  overcharge their borrowers.

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Total repayment

• Many borrowers who could not pay the loans on the
  requisite date ended up ratcheting up huge
  default charges which would take the repayable
  amount to astronomical size. 

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prospective customers

• When the payday loans were available in the mass
  market their strongest point touted to
  prospective customers was their ease of
  processing and repayment.

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The biggest setback

• The biggest setback from these regulations would
  be to Payday Loan Brokers. Such a regulation was
  inevitable given the huge number of people
  affected by payday loans and the increasing
  pressure on the government to rein this sector of
  the financial markets.

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regulations regarding

• On 2nd January, 2015 new regulations regarding
  the payday industry came into effect. They have
  put a ceiling on the interest, default charges
  and maximum repayable amount for payday loans.

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thousands of pounds

• This led to some borrowers getting burdened with
  thousands of pounds of debt when they had
  borrowed 100 or 200. Many influential sections
  of society came out in open opposition to the
  payday lending.

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securing the finance

• However within the payday industry the borrowers
  overlooked this factor as the initial principal
  loan was small and the primary driving factor was
  securing the finance.

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cannot work with lower margins

• This is true for almost all the remaining payday
  lenders. Many have even closed their shops
  knowing that they cannot work with lower margins.

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True Blue Loans

• There are several firms in the market, like True
  Blue Loans, which not only give the borrowers
  adequate advice but provide them with the option
  to repay in 3 to 6 months.

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the taxpayers money

• It also ensured that this problem was tackled
  head on before it became too big and lead to any
  loss of the taxpayers money. The heydays of
  payday lending are definitely past us and we
  should see a new beginning of prudent and
  responsible lending from short term lending
  businesses.

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