With the increase in the number of people seeking out payday loans, a concern has been voiced in the marketing aspect of such loans and the people who are targeted for payday loans.
Nick at paydayloans.co.uk states that there has been an increase in the number of applicants and visitors to the website, and he attributes this to the changing economy and the change in our borrowing needs.
But before we look into this, let’s take a step back, back in time.
Many of us over the period of our banking and borrowing lives may have fallen into arrears with an account, or worse yet, had a repossession, CCJ, or some other credit-damaging, hopefully transient, issue arise. And once something negative goes on our credit histories, it stays there for six (6) years. Which is a considerable period of time.
Now move forward to the present day; we have a spotty credit history, and find ourselves struggling each month, and then out of the blue a financial emergency arises. Maybe it is a car that needs to be repaired, or the washer goes on the fritz, but something comes up where we need a bit of extra cash. Where to turn?
Many of us are turning to payday loans, and why you ask. Because credit history is not a criterion to qualify for a payday loan.
As long as you are working, earning a wage, and have a bank account, you can apply for, be approved, and receive the cash, in some instances, all with an hour.
Amazing really
The number of people applying for payday loans has quadrupled in the past four (4) years, and it is easy to see why.
It is the ease with which you can apply, be approved, and receive the cash.
But all is not as well as it seems in the payday loan community. It is as any industry is, very competitive. There are many companies out there vying for our business. One such payday loan lender was forced to remove adverts they had that targeted students. The adverts basically saying if you need some cash for a night out or weekend away, get a payday loan.
Consumer groups have stated that the interest rates on payday loans are so high that they are basically loan sharks, loan sharks with websites.
And the interest rates for payday loans can be quite high, well over 1000% and in some instances 1700-2000%. But these are short-term loans, only to be used until your next payday, they are not meant to be used longer than this. Also, the interest rates charged are APR’s, annual percentage rates, so it appears a bit inflated.
Also now the OFT, Office of Fair Trading has become involved in looking at and investigating payday loans. They plan to investigate 50 offices of payday lenders to look into their marketing practices and lending procedures. They are looking to see if the lenders are targeting specific groups of people and if they are fully advising borrowers before granting them the loan.
To if payday loans are being targeted at vulnerable borrowers remains to be seen. If however, you consider someone with poor credit vulnerable, then is it targeting, or creating a loan product to fit a special need or fill a request?
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