The continued debate over payday loans has been reignited after a well-known payday loan company recently posted record profits for the past year. The argument over payday loans is divided between those who think they offer a good service, and those who believe their massive interest rates to be unacceptable. So what is the truth about payday loans?
Here are five facts about payday loans, to help you make up your mind.
Pay day loans are not currently recorded on your credit file as payday loan. However, there are moves afoot to potentially start adding them as a separate credit product, which could worsen your credit record.
Research shows that currently one million people in the UK rely on payday loans to meet their monthly household bills. The continued recession, lack of traditional high street bank credit facilities and deflated wages are forcing households to borrow more than ever.
The UK payday loan industry is worth an incredible one billion pounds, and is growing. The average amount borrowed on a payday loan is £200.
Payday lenders must operate under a new code of conduct which includes; giving clear and simple information on the amount borrowed and how much would be repaid. They must also assess customer’s financial situation more thoroughly, and notify customers in advance about payments due to be taken.
Payday loan customers can avoid charges on unpaid direct debits, bounced cheques or extending their overdraft limit, but can also be hit hard with charges if extending the loan.