Payday loans; Short term loans; Wage day advance loans; are all very similar ways to borrow money when you need it most. Under a great deal of scrutiny they can be useful but read our advice.
At Lifestyle, we like to keep our readers up to date on changes in the loans industry and what options are available to them in the secured and unsecured market. With the FCA strongly regulating the payday loan industry, one can expect several changes come January 2015 for those looking to borrow a few hundred quid. In particular, there is the introduction of the price cap that will limit the fees that lenders can charge to 0.8% daily interest or £124 per £100 borrowed. The thinking behind this price cap is that the average payday loan borrower typically takes 5 to 6 loans a year and an effective price cap should save them around £100 per annum. Furthermore, with payday lenders limited to what they can charge, it may encourage new competition to come in and offer an even lower price in an attempt to attract business.
Above all, the role of the payday loan comparison website (PCW) is to play a bigger role in the industry. The regulators including the FCA and CMA want payday loan consumers to compare the price of different lenders more so and see what other lenders are available. Since customers are habitually borrowing from the same lenders, they are topping up or extending their loans and paying a premium for it, not realising that there are cheaper competitors available.
To encourage the influence of payday comparison sites in the industry, new regulation in January will encourage each payday lender to be listed on at least one payday comparison site – and they must have a link to the comparison site visible on their homepage. This will encourage a user who is looking to borrow to also go onto the comparison site and explore other options.
This week, Lifestyle came across The Lenders List – a fairly new payday loan comparison site. But what impressed us most was the simple functionality of the site and how it worked well on mobile and tablet too. The Lenders List does exactly what it says on the tin – it is just a list of payday lenders. So if you are looking to borrow up to £1,500 and you want the funds today, you can compare over 30 payday loan direct lenders on their website. You can click through to the lenders site and deal with them directly.
The Lenders List is a completely free service and they do not ask you to fill in any of your details. They work with direct lenders only and this is something that I have been very impressed with because in the payday loan industry, there is a lot of money to be made by selling on your data or working with brokers who pass on your details to hundreds of other companies – so its very refreshing to see a site that doesn’t work with brokers.
The main comparison element comes from looking at the individual pages on the website. There is a write-up about each of the lenders that they work with and the history of the company and types of checks that they do. You can see a representative payment example to get a feel of just how much you will be repaying when you borrow.
So as the role of payday loan comparison sites become more important in the industry, we look forward to seeing more from The Lenders List and believe that their commitment to responsible lending is certainly the way forward.
Payday loans are an expensive form of short-term credit and should not be used for recreational purposes. The most common reason for a payday loan is for emergency purposes such as car repairs, funerals and medical bills – they should not be used for holidays and shopping sprees or to pay off other forms of debt.
If you are looking for a payday loan alternative, try borrowing from family and friends or going to your local credit union where you can borrow hundreds of pounds for a few months and only pay a few pounds, making it significantly cheaper than a payday loan.
Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk
Money Advice - moneyadviceservice.org.uk
Citizens Advice - Budgeting - citizensadvice.org.uk