The Financial Conduct Authority in the United Kingdom is currently dealing with an abundance of complaints against the so called payday loans companies that trick people into getting small loans that will eventually be transformed in large debts that cannot be paid back. According to the statistics, the Financial Conduct Authority have investigated over 222 …
One of the most profitable industries in the past decade, worth well over a billion dollars in the US alone is represented by payday loans which are currently facing a lot of heat as the number of complaints against them rises day after day. Thousands of customers that feel like they have been tricked into taking a loan and then forced to pay interest rates of up to 33% have sued these companies, in an attempt to get away from the harassing phone calls and e-mails. Officials warn people before taking out a loan from these companies because they could prove to be very difficult to get away from, especially is someone who is planning on taking a loan is suffering from any type of financial issues that cannot be solved in a short period of time.
The problem is however, that the people that apply for these loans are already in tight places, as their financial situation is not so good. In order not to apply for large credit loans from the banks because the sums are larger and the interest rates, although smaller than those practiced by the payday loans, are way smaller, people tend to be scared of dealing with banks. So, instead of this, they prefer using a payday loan company which can be found pretty much everywhere as of now. The sums they borrow may be little, but in time, the amount of money owed that will accumulate is huge and many people may find out that they aren’t able of paying it back. This struggle actually leads to an endless chain of debts that can only be repaid through hard work and perseverance.
Dan Hendrickson, a spokesperson for Better Business Bureau declared that people are drawn to these payday loans companies because the sums are small and they promise to deliver the money quickly, although according to several complaints, sometimes they don’t even do that. Instead of doing this, Hendrickson suggests you to take out a small personal loan from your bank. The manager of the Trades and Labor Federal Credit Union, Peggy Manges promised that the credit loans have overdraft protection, which is a line of credit that can be used by the clients if the money is short in their bank account. This makes it easy, as there are no credit loans to speak of and the interest rate is exact and cannot be modified, thus granting users more of a financial security when compared to other financial instruments.
Manges also stated that the interest rates for these types of credit loans ranges from 9 to 15% much lower than the 33% some payday loans company charge. She also warns people to be careful when searching for such a company because even if you don’t make a loan with them, they might still obtain your phone call and harass you until you do. All in all, it is mandatory to take all aspects into consideration before making a payday loan and only choose a company that respects itself and is willing to offer their customers the same amount of respect in return.