What Is a Payday Loan?
A payday loan involves borrowing a relatively low amount of money, usually around £100-1000, which you will be scheduled to pay back over a very short period (usually about a month). Since payday loan companies usually charge fees rather than interest, the balance you owe can shoot up even though it is intended to be borrowed over a short space of time.
How Has Payday Legislation Changed?
Payday loans are some of the most vicious forms of lending available today. Recent FCA regulations have severely limited how much payday loan companies can charge in interest and fees, but considering that this kind of debts still affects tens of thousands of people every year in the UK it clearly hasn’t gone far enough.
The 2017 FCA regulations are as follows:
- Payday borrowers cannot pay more than 0.8% of the total amount borrowed.
- Interest is now capped, meaning you cannot pay back more than double what was borrowed. However, if you have been in a position where you have had to borrow from a payday loan company, then this is still an unrealistic amount
- Lenders cannot repeatedly try to take the money they are owed directly from your account. They can now only try twice, before contacting you instead.
What makes things even worse is that these companies often target people in the most desperate of financial situations – a tactic that is not uncommon in loan sharks. If you are facing debt problems payday loans are never a good answer. For genuine expert help with debt, or if you are struggling to meet the repayments for a payday loan, then call Debt Free Life on 0800 808 5124.