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Payday Loans UK

A LOOK INTO STATISTICS: Payday loans are a great deal of satisfaction for people who are on benefits, although they are not more facilitated in terms of payday loans than the people who are not benefits but this doesn’t discriminate anyone from each other, there are mere statistics. The payday loans UK industry has grown 4 times as much as it was in 8 years back with more and more people relying on payday loans to cover their needs and in the last 5 years, even more, rapid growth has been seen in this payday lending industry. The number of people who borrow payday loans has also increased four folds in the recent years.

MIND WOBBLING INTEREST RATES: There is currently no restriction on APR a payday lending company charges on payday loans and typically they charge 25% interest per payday loan per month, there is also no restriction on roll over payday loans for payday lending companies which allow them freedom to charge as much interest as they want on any amount.

The lenders often offer capital up to £500 per month and average borrowers tend to apply for payday loans between £250 to £300

WHAT THE LAW SAYS: The Consumer Credit Act 1974 clears out an obligation for lenders to obtain a license from UK Office Of Fair trading. Although there are no restrictions on interest rates on payday loans or payday rollover loans, but the government is pending a new legislation to put a cap on interest rates every payday lending company charges. ENCOURAGING EFFORTS BY GOVERNMENT: On top of the main goals Martin Wheatley, the FCA’s chief executive officer, said: “For the many people that struggle to repay their payday loans every year, this is a giant leap forward. From January next year, if you borrow £100 for 30 days and pay back on time, you will not pay more than £24 in fees and charges and someone taking the same loan for 14 days will pay no more than £11.20. That’s a significant saving. “For those who struggle with their repayments, we are ensuring that someone borrowing £100 will never pay back more than £200 in any circumstance. “There have been many strong and competing views to take into account, but I am confident we have found the right balance. “Alongside our other new rules for payday firms – affordability tests and limits on rollovers and continuous payment authorities - the cap will help drive up standards in a sector that badly needs to improve how it treats its customers.” In order to achieve these goals the FCA has proposed the following:

Initial cost cap of 0.8% per day, Fixed default fees capped at £15, and Total cost cap of 100%.

LAWS REGARDING THE ADVERTISEMENTS OF PAYDAY LENDERS: The UK government has passed strict legislation against the companies who hide their actual APR rate, they are bound to follow the rule of showing true APR rates in advertisements.

This was posted in Bdaily's Members' News section by Danielle R. Nelson .