Bad Credit Payday Loans

The financial economy has been known to be uncertain and the introduction of payday loans has made this the economy more uncertain which was clearly not the intent of the people behind their inception.  There were questions that were raised on bad credit payday loans as they were opening up to a considerable size of the population with questionable credit history. This situation did not face large scale regulation up until recently, when it came to the attention of various regulatory bodies, the apex being the Financial Conduct Authority. This was a concern that needed to be addressed immediately as the world of payday lending was beginning to become one of the most widely criticized means of loan generation. 

The reason for their inception was to bridge the gap between the borrower and the institution and create an alternative source of credit for mid segment families with a stable source of income, who could use some extra money to cover unprecedented expenses. The simplest example would include ones like car repair expenses or expenses which have not been anticipated.  Over the years, these loans have targeted families which are more vulnerable than the rest and that can be blamed on their misleading advertising. The middlemen or the brokers employed by these lending agencies have also targeted people who don’t have the potential to pay cash in the 2 week long period. This is completely in violation of the rules and regulations which define the nature of lending in this industry.

However, the situation is now changing. The individuals with bad credit payday loans are adding to the financial turbulence that has been expanding over the last few years.  This sector has faced a sudden surge of regulations which has dismantled their place completely. The Financial Conduct Authority is the highest regulatory body that has carefully drafted the reasons for the regulations which were creating a large number of people entering the dreaded cycle of debt. Some of the main reasons included the exorbitantly high interest rates, the penalty fees, and the repayment collection methods which have known to be torturous for the eventual borrower.

There are certain examples of borrowers with bad credit payday loans bearing the brunt of their intolerable ways. Let us discuss some of these examples:

1)      There was an incident of a borrower posting on various online websites offering payday loans, looking to find the best possible option for these types of loans. Her personal account information was accessed by a certain payday company and her account was regularly debited till the time her account was wiped clean.

2)      There were certain global processing systems that called a certain individual at work and left messages stating that she owed a company some amount of money and that because of that, there were litigation cases registered against her. This was done in the name of a company that did not exist.

3)      Another case involved an individual taking out a loan of a certain amount, after which she was repaid the amount on consolidating her debt in a debt relief organization and closed her account well in time. That person continues to receive phone calls and threats of legal action against her.

The reason why these cases need to be highlighted is because these are some of the most common examples of the fraudulent practices adopted by these payday lenders. However, it is important to know when one can file a complaint against a particular payday lender and it is equally important to understand how and when a complaint can be filed, so that this information cannot work against us in the future.

·         If the lender did not make it clear how much the loan will cost you. He is supposed to take you through all the charges and interests applicable right from a 100 pound amount.

·         If you weren’t complete and accurate information on how to pay back your loan. It is advisable to document your conversations so that it is easier to prove in a consumer court.

·         If the lender did not do a complete check into your background, verifying your ability to pay as well as taking into your consideration all the factors responsible for you taking this loan. It is his responsibility as a lender to gauge the circumstances under which you are applying for a loan.

·         If the lender did not tell you that these types of loans are not supposed to be used on a long term purpose, especially if you are in some sort of financial difficulty.

·         If the lender did not communicate how Continuous Payment Authority works. CPA is where you give them the written permission to deduct amounts from your credit/debit card. This needs to be mutually agreed upon.

·         If the lender did not tell you that they are going to be deducting the amount in regular intervals or in one go, depending upon what type of loan you have opted for. This is usually done through CPA.

·         If the lender did not talk about the implications of late repayment through their online advertising or done personally through an email or a text message. This is a mandatory requirement and needs to be followed to the tee.

It is also essential to understand this from a lender’s point of view. All the complaints that you can file are guidelines meant for these agencies to work in a professional manner. If this is not done, then it leads to trouble for the lending company as well as the borrower.

Overall View:

There needs to be a certain amount of education that needs to come with these types of loans and it is important a borrower knows his rights fully, before stepping into something as dangerous as this. These loans need to be regulated and the regulation needs to be mandated, so that there is no unfavourable practice that leads the borrower in trouble. This is the situation that has been affecting the consumer in many ways and as a result of that, the need for regulations was felt.