Tag Archives: Loans

What Makes Cash Loans Safe and Secure These Days?

Cash loans came on the market in a dodgy manner. Basically, you could get anywhere between £100 and £500 on average – more or less, depending on the lender. The fees were quite high, but people with low debts or high affordability faced no issues whatsoever. Then, those who failed to pay ended up in more and more debt. In other words, a cash loan was not the best option if you failed to consider your options.

However, things have changed a little. Cash loans are now regulated. In 2016, the FCA has decided to step in. Lots of people ended up with more debt than they had initially. Fees were pretty clear, but there were hidden charges that overwhelmed them. The FCA has come up with a series of strict rules and regulations. Most of them were rigorous and hard to pass, which was excellent for the consumer.

These days, most lenders are regulated and have to follow a code of conduct. From this point of view, it is critical to make sure your lender has a valid license and is thoroughly regulated by the FCA. When it comes to the rules, what are the most important ones to be aware of?

Interest Rate Limits

Interest rates used to be pretty high a decade ago, but things have changed since the FCA has stepped in. These days, lenders are limited. They can only add 0.8% a day. In other words, if you borrow £100 for a couple of days, the interest rate cannot exceed £1.16 for this time frame. Some lenders rely on lower rates to attract customers. Obviously, it depends on how much time you need to repay the loan.

Back before the FCA regulations, interest rates were the most annoying factors in the process. Customers were forced to pay a fortune in order to overcome their emergency debts and many of them ended with even more trouble.

Penalty Fees Regulations

Penalty fees applied for consumers breaking the agreement. You had to make a payment on the third of each month. You missed it, you got charged. These fees could be quite problematic. If you let them add up, they could have overwhelmed you. Things are much better now.

A fee or a default issue cannot exceed £15. If you end up defaulting, the lender can keep charging interest. However, the rate will not change. It will stay at the exact same rate as when the loan started. There will be no changes.

No Doubling Up

Some people used to get £100 or £500, only to end up paying more than double back. The interest rate was pretty high. Then, there were fees and lots of charges, which could easily skyrocket the repayment plan. These days, the FCA has agreed that any charges and interest rates cannot exceed the initial amount.

Simply put, if you take out £500, you will never have to pay more than £500 in default fees, charges, taxes and interest rates. You know for a fact that this is the maximum limit your fees can go up to – just in case you actually end up struggling to repay.

Final Words

These new rules implemented by the Financial Conduct Authority have cleared out the scum and made room for genuine lenders. These days, chances to get ripped are close to nor. If a lender is not registered with the FCA, its operations are illegal. This is the main reason wherefore you must ensure that you borrow money from regulated credit providers only. Sure, you may find better rates here and there, but this should be your main priority.

Three Major Considerations When Thinking About Payday Loans

Payday loans represent a common necessity these days, whether it comes to a medical emergency, a car repair, some servicing or perhaps an unexpected shopping session. All in all, payday loans may seem easy at first, whether you are after £100 or £500, but then, not everyone might be approved. In fact, there are some criteria you must meet. All in all, here are a few tips to increase your approval rate.

Consider the Basic Loan Criteria

This is the first aspect to take into consideration. However, lots of people are more focused on getting the money as quickly as possible, rather than actually paying attention to the loan criteria. Most lenders will get back to you if you fail to pay attention to everything. This only means you are wasting time. Instead of getting your money in a few hours, you will need to come up with more documents.

Most commonly, credit providers will consider the circumstances for the risks of not being able to pay. Therefore, the main criterion involves being in employment. If you do not have a job, it is not really a payday loan, is it? At the same time, if you apply for a lender in the UK, you obviously need to be a UK resident. You should have a UK bank account for the money to be transferred to.

Consider the Affordability Criteria

Your personal finances dictate this aspect when considering payday loans. While lenders will do it too, it is mostly your responsibility. Consider your net income on a monthly basis. Consider your monthly expenditure, from rent and bills to socializing and other habits. Any regular expense should be included.

Do you have enough income left? Would you be able to repay the loan? In the attempt to make sure they get the money, lots of people tend to lie in these statements. They reduce some of their expenses, such as rent or perhaps some utility bills. While lying might help you get the money easier, it will not help you in the long run.

You risk not being able to pay, meaning you risk lots of fees and taxes. Sure, these companies are regulated by the FCA now, but fees may still occur to a particular limit.

Consider Your Financial Situation

At this point, a little responsibility is mandatory. If you have struggled with long term money issues, a payday loan may not be the best option. The same rule applies if you have an increasing level of debt. A payday loan could help over the next few days, but you will get in even more trouble later on.

Furthermore, lenders will look at these issues. If your personal debt keeps going up, most lenders will lose confidence in your capability to repay the loan. Simply put, a payday loan will make the problem way worse. It might come disguised as a short term saviour, but you will end up with even more debt.

Final Words

As a short final conclusion, payday loans represent a good choice when you are out of cash. No matter what you need some money for, a payday loan could bring it within a few hours. You must, however, make sure this is only a temporary problem – an emergency, an unexpected situation or just a matter of bad timing. Under other circumstances, you should be able to handle it.

Seeing a payday loan as a temporary issue is the way to go. It should not affect your debt and you must be able to cover it once you get paid. Otherwise, it could get you in even more trouble.