Payday Loans And Your Rights
There is no doubt that payday loan seems to be the most convenient option when all other options to get hold of quick cash fails. What you may not be aware about is how quickly this convenient solution can turn into a nightmare. The short term and quick monetary solution that was meant to help you overcome your unexpected expenses will soon become a huge financial problem. In short, a payday loan can be quite deceitful and manipulative. So, if you are thinking about applying for a payday loan as there are no viable cash solutions available or you already have one that you are finding hard to take care of then it is important that know your rights.
Know your rights and never let your short term debt cause long term problems. Payday loans are small loans offered for short tenure. In UK they can be applied online or from high street lenders. They are easy to obtain but offered with a very high interest rate. If you are facing any short term monetary issues there may be several other ways to deal with it. So, before applying for a payday loan, first think about the other alternative options.
If you still decide to apply for a payday loan, make sure you shop around, compare the charges and interest rates. You should be clear about the consequences you will face when you fail to pay back the loan. In this article we will tell you more about what the lenders should do ahead of offering you a payday loan, how you should pay it back, what happens when you do not pay back and how you can complain about a lender.
Before Applying For A Payday Loan
Make sure you compare and shop around to find the best deal. All online payday loan lenders should publish the deals they are offering on at least one price comparison website. Besides, the price comparison site should be regulated by the Financial Conduct Authority. To confirm that you can check the Financial Services Register.
Before accepting your loan request, a lender should first check if you will be able to repay back the loan. For that they should enquire about your monthly income and if enough money is coming in so that you can pay back the loan on time.
The lender should clearly explain you that payday loans are short term loans and not suitable for long term borrowing. They should also explain you about the features of the loan, including how much the repayment amount will be, the interest rate charges and what the fee will be if you fail to pay back. The lender should also explain how CPA (continuous payment authorities) works and how it can be cancelled.
Paying Back A Payday Loan
Typically, a payday loan can be borrowed for one month. By the end of the loan term you will have to pay back the money plus the interest. The most common way of paying back is through your bank debit card. When applying, you will have to agree to let the lender withdraw the money directly from your bank account, which is known as continuous payment authority (CPA).
If your bank account does not have enough money, lenders will charge you late payment. However, the
Lender is not allowed to use CPA more than twice if they are unable to withdraw the cash from your account.
Extending A Payday Loan
When you cannot afford to repay a loan, you should inform the lender and instruct the bank to stop the payment. During such situation, the lender may offer you loan extension or rollovers. Under loan extensions you will be offered extra time to repay the loan. While when you rollover, a new agreement will be made for the repayment of the original loan. Beware of both loan extension and rollover, as the lenders will charge extra interest, fees and other charges for such facility. Your lender cannot roll over your loan more than twice. Besides, they will have to provide you information about where you can find free debt advice.
How To Make A Complaint
All payday loan lenders in UK are supposed to follow a Good Practice Customer Charter as well as the Financial Conduct Authority (FCA) rules. If you find any lender who isn’t following such rules, you are free to complain. First you should contact the lender and try to sort things out. If you are still unsatisfied you can complain to the Financial Ombudsman Service (FOS). You can also forward your complaint to the trade association. , you can also make a complaint to the association.
For any other help of assistance with your payday loan you can contact Citizens Advice consumer service by phone or on-line. You can also get advice from your local Citizens Advice Bureau.