A charity for debt advice in the U.K. is seeing numerous clients looking for help with debt from online payday loan lenders increase. The Consumer Credit Counseling Service (CCCS) is looking towards a record number of people requesting debt assistance this year. Having served fewer than 1000 less consumers dealing with payday loan debt from last year, they are noticing that the amount of payday loans has risen. More than 12% of the consumers are dealing with debt from five different payday loans. In fact, a percentage of those consumers are dealing with having debt from 10 different payday loans. One outstanding payday loan can cause enough damage on finances, having 5-10 out at one time is overwhelming to a budget.
The CCCS fears that as the cost of food and fuel continues to soar, so will the amount of people using multiple payday loans to get by. The charity is hoping that lenders will take some responsibility and deny loaning to those who have current payday loan debt.
The U.K. continues to work at regulating payday loan lenders. This past July, more than 90% of the short-term lenders committed to step up their practices to more responsible practices. This includes the lenders doing more to assess potential borrowers for their ability to pay back the loan. Some consumer groups are watching for clear signs of improvement or they will push for further restrictive lending practices.
The areas of concern with U.K. payday lenders are with loan rollovers, affordability and high interest being charge. The lenders need to improve their practices to help protect consumers’ struggle with payday loan debt.
A much as lenders from any country need to step up their part in responsible lending, you can’t take away from expecting borrowers to do the same. As thorough as a lender can check the credibility of an application, once the money has been processed the rest of the transaction success is in the hands of the borrower.
Responsible payday loan lenders should check:
- What is the take home income of the applicant?
- Is there job stability?
- Are there other payday loans outstanding?
- How well-maintained is the bank account?
- Are the contact numbers authentic?
There are lots that a lender can do to help process loans with accountability. Best practices for these lenders have grown and still have more room to flourish. Unfortunately, even with stricter regulations, there will be lenders who play by their own rules.
In the U.S. there are states which ban payday loans altogether, but residents can still find lenders to do business with. Online lending in particular will open the doors to those lenders from other countries that do not have to follow the rules. Predatory lenders will not deny your loan based on a regulation alone. The borrower needs to understand that a payday loan will destroy a budget if the payoff cannot be afforded on the original due date.
Direct payday loan lenders need to continue to educate the public on the terms and policies of these short-term loans. Give back to the community with providing information on what other choices are available to those with little or no credit for themselves could help lower the numbers of people in serious payday loan debt.
