FCA facing calls for stricter payday loans cap
The FCA is under pressure to go further in its proposed clampdown on the payday loans sector after the number of people with short-term debt surged 42 per cent during the first six months of 2014.
New figures released by debt charity StepChange reveal the number of people with payday loan debts rose from 30,762 in the first half of 2013 to 43,716 in the same period this year.
19 August 2014
19 August 2014
15 July 2014
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Furthermore, the total payday loan debt handled by the charity increased from £51m to £72m year-on-year.
In a bid to curtail the payday loans sector, the FCA has proposed capping the amount lenders can charge at 100 per cent of the value of the loan. The new rules are due to come into force in January 2015.
In its response to the FCA consultation, published alongside today’s findings, StepChange urges the regulator to consider implementing a stricter cap.
It says: “There is a case for a tougher total cost cap than 100 per cent of the value of the loan, especially in relation to higher value loans.
“The Competition and Markets Authority found that the average initial payday loan taken out is £260, while the average StepChange Debt Charity client with payday loan debt has an income (net) of £1,305.
“This means that someone with just one payday loan debt which reaches the 100 per cent cap would end up owing a substantial part of their income and could easily lead to further borrowing and deeper financial difficulty.”
StepChange chief executive Mike O’Connor says: “High-cost short-term credit is rarely the answer to financial difficulties. While, the FCA’s proposed price cap is a crucial step forward, there is still much work to be done to ensure that payday loans can no longer plunge people into a cycle of unsustainable borrowing and entrenched financial hardship.
“Consumers will continue to need access to short-term credit and FCA action should also stimulate the reform of this market. This needs to include problems in the adjacent markets including overdrafts, logbook loans and home credit where consumers also suffer detriment.”
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FCA facing calls for stricter payday loans cap | News | Money …
The number of people struggling to cope with payday loan debts has risen by more than 13,000 in the past year, figures show.
Debt charity StepChange said they dealt with 43,716 people in the first six months of this year, compared with 30,762 for the same period last year.
The figures, showing that the charity has handled more than £72 million in debts in the first half of 2014, highlight the need for further action to ensure better protection for vulnerable people who might consider taking a loan, it said.
In July the Financial Conduct Authority (FCA) announced proposals to introduce a cap on the fees and interest charged by payday lending firms in a bid to protect borrowers from escalating debts.
The proposals, which include default fees capped at £15 and a limit of 0.8% per day on interest on unpaid balances, should mean those who cannot repay on time will never have to pay back more in charges than the amount borrowed.
The latest clampdown on the industry by the FCA is due to come into force in January, subject to a consultation period.
StepChange is calling for a tougher total cost cap than 100% of the value of the loan, especially in relation to higher value loans, as well as an obligation for lenders to have access to a database showing a borrower’s financial situation – avoiding instances seen last year where thousands of people had taken out five or more payday loans.
The organisation also said there should be stricter limits on how much firms can profit from default fees, encouraging more responsible lending, and makes the case for the proposed default charge of £15 to be brought in line with the £12 default charges for credit cards.
Chief executive Mike O’Connor said more can be done to protect those facing serious money worries.
“Today’s figures show that the payday market all too often fails to treat customers fairly, especially those in financial difficulty,” he said.
“High-cost short-term credit is rarely the answer to financial difficulties. While the FCA’s proposed price cap is a crucial step forward, there is still much work to be done to ensure that payday loans can no longer plunge people into a cycle of unsustainable borrowing and entrenched financial hardship.
“Consumers will continue to need access to short-term credit and FCA action should also stimulate the reform of this market. This needs to include problems in the adjacent markets including overdrafts, logbook loans and home credit where consumers also suffer detriment.
“The goal of an affordable lending market treating consumers fairly will also involve others but the FCA has a critical role to play in creating the right environment.”
See original article:
Payday loan debt problems soar « Shropshire Star
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Cash Sales Are Declining, Great News For First-Time Home Buyers
Peoples Home Equity comments on a recent publication release from Corelogic.com concerning the number of cash sales in May.
buyers who finish and submit their mortgage paperwork the quickest will have the opportunity to purchase a home the fastest
Chicago, IL (PRWEB) August 31, 2014
Lenders like People Home Equity and first –time home buyers appreciate knowing that cash sale are on the decline. According to an August 13th release by Corelogic.com, “cash sales made up just 34.4 percent of total home sales in May 2014. The lowest share since May 2010, and down from 37.4 percent from the same month a year ago.” Cash sales also fell month-over-month from 36.9 percent in April, however, Corelogic points out that “cash sales share comparisons should be made o¬n a year-over-year basis due to the seasonal nature of the housing market.” On a year-over-year basis, cash sales have fallen “each month since January 2013.” Readers should note that “prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent.” Cash sales peaked in January 2011, “when cash transactions made up 46.2 percent of total home sales.”
Less cash buyer’s means more buyers using financing, which is great for business for mortgage originators. However, apart from a business perspective, Peoples Home Equity finds this news of less cash buyers especially uplifting for first-time home buyers. The less cash buyers present in the market, arguably, the less competition first-time home buyers face when purchasing a home. Home sellers appreciate cash buyers because it leads to a faster home sale. However cash buyers are showing up less in the market now that home prices have risen considerably since market prices were at dismal lows in 2010. Regardless of the decline in cash buyers, first-time home buyers must remember that the housing market will now see a rise in competition from financed buyers. This now means that buyers who finish and submit their mortgage paperwork the quickest will have the opportunity to purchase a home the fastest. Getting approved for a home loan quickly gives individuals best chance of bidding and buying their desired property.
Peoples Home Equity loan officers are ready to help all Americans through the mortgage application process. The lender has streamlined the application process to make it as simply as possible. Get started now at PeoplesHomeEquity.com and fill out their “Home Loan Quick Qualifier” field. Or simply contact a Peoples Home Equity loan officer today at: 262-563-4026
Cash Sales Are Declining, Great News For First-Time Home Buyers
Personal Financial Advisor, OranHall
I am about to open a payday loan business and I am asking for your advice and suggestions. I would be very happy to hear from you.
FINANCIAL ADVISER: There is no full-fledged regulation of the payday loan business. Commercial banks and credit unions which grant such loans are regulated by the Bank of Jamaica, but there are many other players in the payday loan business and they are not regulated.
You seem to be interested in setting up an informal payday loan business, but you should note that such businesses will soon be regulated.
My first suggestion is that you register your business at the Companies Office of Jamaica and treat it as a serious enterprise. Select a reliable and reputable group of persons to serve as its board of directors. If you can find persons with expertise in the credit business and with the ability to give time and add value to your business, invite them to serve as directors.
Ensure that your business is adequately capitalised. You will need financial resources to meet the daily expenses of running your business and, importantly, to lend to your customers so that the business can make money.
Businesses take time to make money and it is easier to make them strong if profits are reinvested. Pay yourself a salary rather than withdraw money to meet your expenses. Remember that you are running a business.
The Money Lending Act requires that businesses such as the kind you want to set up lend at a maximum rate of 40 per cent per annum, but many informal operators pay no attention to this requirement sometimes charging way above that rate. Where the rate is to be exceeded, it is required by law that an application be made to the Ministry of Finance for an exemption.
You will find, though, that rates are market-driven, so you must be aware of the rates charged by your competitors – and there are many. You may use the add-on or reducing balance method to determine how interest is determined. In fairness to the borrower, it makes sense to also state the annual percentage rate.
This will help the consumer to better understand the real cost of the loan and to be in a better position to compare rates.
Make sure that you use a contract that spells out very clearly the terms and conditions of each transaction. Once signed, the contract binds both parties. Seek legal assistance to draft the contract if necessary.
Be fair to the consumer. Avoid loosely adding processing fees and other charges which increase the cost to the unsuspecting borrower. Bear in mind that lending rates are as high as they are due to the risk to which the lender is exposed.
But you must protect your own interest. Some lenders give unsecured loans; others do not. A good, tight contract is one way to protect yourself and your business.
Additionally, limit your business to employees of reputable organisations and to individuals who have worked with their current employer for a minimum period of six months, for example. Set upper and lower loan limits. Pay attention to the quality of the guarantor and the collateral.
Pay attention to the quality of your customer. Some lenders do this by requiring that prospective customers provide the following: a valid government-issued identification, proof of address, their TRN, three recent pay slips, a job letter, a statement of account from the bank and personal references. It is up to you to decide how far you will go in confirming who your client is.
It is one thing to get customers. It is quite another to keep them and to get referrals from them to grow your business. Keep your part of the contract and give service above the customer’s expectations.
Charge reasonable rates and focus on the long-term viability of your business. If you get things right now, it will be much easier for you when the business is regulated.
Oran A. Hall, principal author of ‘The Handbook of Personal Financial Planning’, offers free personal financial planning advice and email@example.com
Starting a payday loan business – Business – Jamaica Gleaner …
This is from
cash loan – Yahoo News Search Results:
. You have the savings for a down payment and the cash flow in
your budget to afford the payments. Everything is great, except
for one thing: Your credit score is bad. Is this a death knell
for your home purchase?
Maybe. But then again, maybe not. Here are the best strategies
and tactics you can follow to overcome that credit score and buy
the house in spite of it.
What is a bad credit score?
Generally speaking, credit scores break down as follows:
There are tons of different reasons a credit score could fall;
however, moving into that below average or poor range takes a
pretty serious event like several missed payments, bankruptcies,
foreclosures, or collection accounts. But don’t worry… life
happens to even the best people, and a missed payment in the past
is not the end of your home buying journey.
A bad credit score simply indicates to a bank that you’ve had
trouble repaying debts in the past. To overcome that history, you
must take extra steps to prove to the bank that history won’t
repeat itself. To do this, you must think like a bank.
How to think like a bank
Banks care first and foremost about getting repaid. That means
you must prove to the bank that the loan will be repaid.
Remember, as we work through these concepts, you probably won’t
have every “i” dotted and “t” crossed. That’s OK. At the end, we
will bring it all together with a solution for the worst-case
How are you going to repay the loan?
Typically, the answer to this question is through your monthly
cash flow. This is the income from your job after you subtract
your living expenses like food, water, electricity, debt, etc.
Banks use a ratio called the debt-to-income ratio to determine if
your monthly cash flow is sufficient to afford the debt. The
ratio is calculated by dividing your total monthly debt payments
into your total monthly income (before taxes).
For borrowers with good credit, a 40%-50% debt-to-income ratio
is typically enough to qualify for the loan. For those with
credit problems, this ratio needs to be much less.
If that doesn’t work out, what is the backup plan?
What happens if you lose your job? That could be the reason your
credit score isn’t the best in the first place. The reality is
that this can happen and, when it does, both bank and borrower
feel the financial pressure. That’s why banks always look for a
Do you have any savings or cash hidden under the mattress?
Banks will want to see enough savings to cover your living
expenses and debt payments for at least six months. The more
savings, the better.
It gives the bank comfort that, if something goes wrong, you,
your family, and the bank will all be financially stable until
you can find another income source.
Question 3: What happens if your backup plan
It may seem like overkill, but banks want a backup plan for the
backup plan. When all else fails, the bank wants to make sure
that if the house must be sold, the loan will be repaid.
Unfortunately, this often means foreclosure.
To you, that means a bigger down payment. By putting in more
of your money up front, it creates breathing room for the loan if
it must be sold quickly. If a conventional mortgage requires a
20% down payment, try to put down 30%, 40%, or more.
You may be thinking, “Why should my family put in more money
now just so the bank won’t lose money later?” Well, if you don’t
do this, you most likely won’t get the loan. And if you accept
the loan, you’re giving your word that you’ll repay the debt. As
long as you pay the monthly payments as you’ve agreed to do, you
have nothing to worry about.
Putting down a bigger down payment will benefit you by
lowering the monthly payment, as well, making it less likely that
you’ll ever be in the worst-case scenario in the first place.
Even further, it gives you more leeway to sell the house yourself
prior to foreclosure, saving your credit score from further
damage in the future.
Again, the idea with all of these considerations is that,
because your credit score is low, you need to prove beyond a
shadow of a doubt that you can
repay the loan.
The worst-case scenario
What if you’ve worked hard, saved up, dotted your “i’s” and
crossed your “t’s,” but the bank still won’t approve your loan?
You have the cash flow, the savings, and the down payment, but
you still get declined for a conventional mortgage?
At this point, it’s time to look at subprime options. Subprime
is a kind of dirty word in the post-financial crisis world; but
that doesn’t mean it’s not a viable solution for many
With a subprime loan, the specialized banks and lenders
mitigate the perceived risks of a loan by charging a
substantially higher interest rate. They lower their lending
standards so that you can get the money you need. The higher
interest rate is, in essence, the bank charging more for lowering
The subprime loan will be much more expensive, but at least
you’re able to get the financing you need to buy the home. Over
time, as your credit score improves, you should be able to
refinance that subprime loan into a conventional loan with a
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Bad Credit? No Problem. Here’s How to Get a Home
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Bad Credit? No Problem. Here's How to Get a Home Loan
If your cup of coffee is less than $5, chances are you’re going to pull out cash to pay for it – unless you’re a millennial. Then you’re more likely to whip out plastic, regardless of how big or small your purchase is.
According to a recent survey by CreditCards.com, cash has long been king when it comes to small purchases (under $5). Overall, about two-thirds of credit card-carrying Americans pay for small purchases with cash, 22 percent use debit cards and 11 percent use credit cards.
But the younger generation is helping to change those figures.
The generational divide is striking. A slight majority (51 percent) of consumers 18-29 prefer plastic to cash, the only age group to do so. A preference for cash becomes stronger in each advancing age bracket, until at age 65-plus, 82 percent prefer cash.
Financial experts say paying with plastic isn’t bad. But millennials are using debit over credit by a near 3-to-1 ratio. Debit cards offer fewer protections for consumers. Plus, they don’t help build credit.
Both offer solid protection from fraud in case your card is lost or stolen, particularly if you report the disappearance in a timely fashion. However, Matt Schulz, senior industry analyst for CreditCards.com, told MarketWatch:
“If your debit card information gets stolen, somebody can take real money out of your account that you won’t be able to use to make a car payment or a doctor’s bill,” Schulz says. “That money may be gone for a week or two.”
Some people opt to pay with a debit card because they’re trying to be money-conscious, limiting their purchases to money they have. Bloomberg Businessweek said:
Debit cards work a lot like cash because the money comes straight out of a checking account. A credit card is more complicated. It can be a better choice than a debit card if you pay off your card in full each month because you get what amounts to an interest-free loan and rewards points to boot.
Other survey findings include:
Got kids? Parents are more likely (41 percent) to use cards to pay for purchases under $5 than people without kids (30 percent). As a parent, I usually don’t have enough free hands to fiddle with change, so using a card is easier. College-educated are comfortable with plastic. Americans who have graduated or attended college use plastic twice as often (39 percent) to pay for small purchases than their counterparts who haven’t attended college (22 percent). Politically, we’re on the same page (about one thing, at least) . When it comes to paying for a small purchase, 30 percent of Democrats and 28 percent of Republicans prefer plastic to cash.
I rarely carry cash. But if I have it on hand, I use cash to pay for small purchases.
Do you use cash, credit or debit to pay for small purchases? Share your comments below or on our Facebook page.
This article was originally published on MoneyTalksNews.com as ‘Millennials Prefer Plastic to Cash for Small Purchases’.
Banking & BudgetingEmployment & Careercredit cardsdebit cards
Millennials Prefer Plastic to Cash for Small Purchases
THOMASVILLE, Ala.–(BUSINESS WIRE)–
United Security Bancshares, Inc. (USBI) announced today that the Board of Directors, at a meeting held earlier today, declared a quarterly cash dividend of $0.01 per share. The dividend is payable October 1, 2014, to shareholders of record at the close of business on September 12, 2014.
“Our Board of Directors is pleased to resume paying a quarterly cash dividend to our shareholders,” stated James F. House, President and CEO of United Security Bancshares, Inc. “We will continue to evaluate any future dividend payments so that they will be consistent with maintaining our strong capital base,” concluded Mr. House.
About United Security Bancshares, Inc.
United Security Bancshares, Inc. is a bank holding company that operates nineteen banking offices in Alabama through First United Security Bank. In addition, the Company’s operations include Acceptance Loan Company, Inc., a consumer loan company, and FUSB Reinsurance, Inc., an underwriter of credit life and credit accident and health insurance policies sold to the Bank’s and ALC’s consumer loan customers. The Company’s stock is traded on the Nasdaq Capital Market under the symbol “USBI.”
This press release contains forward-looking statements, as defined by federal securities laws. Statements contained in this press release that are not historical facts are forward-looking statements. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. USBI undertakes no obligation to update these statements following the date of this press release, except as required by law. In addition, USBI, through its senior management, may make from time to time forward-looking public statements concerning the matters described herein. Such forward-looking statements are necessarily estimates reflecting the best judgment of USBI’s senior management based upon current information and involve a number of risks and uncertainties. Certain factors that could affect the accuracy of such forward-looking statements are identified in the public filings made by USBI with the Securities and Exchange Commission, and forward-looking statements contained in this press release or in other public statements of USBI or its senior management should be considered in light of those factors. Specifically, with respect to statements relating to loan demand, growth and earnings potential and the adequacy of the allowance for loan losses for USBI, these factors include, but are not limited to, the rate of growth (or lack thereof) in the economy, the relative strength and weakness in the consumer and commercial credit sectors and in the real estate markets and collateral values. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements.
FinanceInvestment & Company Information
United Security Bancshares, Inc.
Thomas S. Elley, 334-636-5424
United Security Bancshares, Inc. Declares Cash Dividend