It’s hard to avoid in the news this week about Parliament voting on the subject of the payday loans industry. Critics of the short-term loans industry are calling for caps on the cost of credit and cut down on the number of people using payday loans.
This comes after one of my recent blogs talking about the fact that moneysupermarket.com reported a 58% rise in demand for payday loans, as they seem to be increasing in popularity.
The biggest critic of the payday loans industry is Labour MP Stella Creasy, who is leading the call to change the way that the short term loans industry works. It does make you wonder though, what will happen to the customers if payday lenders weren’t able to compete anymore, as more and more people are taking out short term loans to help with emergency finances.
When used correctly, payday loans can actually work out cheaper than going over your overdraft limit and paying for high bank fees. The danger is, when people use them either to cover longer term debts, pay off other loans or use them not as a temporary solution. This is something that we always discourage here at Pay-day-loans-uk.co.uk, as we stick to a code of responsible lending.
To work out if you will be able to afford your loan, instead of looking at the ‘high interest rates’ (APR), you should instead look at the repayments charts of your lender. For example, some lenders charge £25 on top of every £100 that is borrowed, but this does vary between loan providers.
So, what will happen in this vote to amend the Finance Bill? Will it affect the payday loans industry? If a cap is placed on interest, will it then price out all of the lenders, meaning people will have no choice when it comes to emergency credit? Who knows. We will have to wait and see what decision is made and how it affects customers.