A sample text widget

Etiam pulvinar consectetur dolor sed malesuada. Ut convallis euismod dolor nec pretium. Nunc ut tristique massa.

Nam sodales mi vitae dolor ullamcorper et vulputate enim accumsan. Morbi orci magna, tincidunt vitae molestie nec, molestie at mi. Nulla nulla lorem, suscipit in posuere in, interdum non magna.

Four in ten borrowers get a payday loan even if one lender rejects them

Four percent of these people admitted to taking money from an unlicensed
lender after they were rejected, and 2pc went into debt with a credit union.
More than three-quarters did not know whether their lender was licenced, and
33pc said they had considered borrowing from an unlicensed lender after they
were rejected by the major payday loans firms.

“The more rigorous affordability checks mean they are turning down people
[who] still want a short-term loan,” said Russell Hamblin-Boone, chief
executive of the CFA. “The worry is, are the other payday lenders being as
rigorous as the most compliant members or are they new lenders that are
under the regulators’ radar at the moment?”

The FCA took over regulating consumer credit in April, bringing about 500
payday lenders under its remit. The watchdog found in its own survey of
2,000 customers that 60pc said they would not borrow money if they were
denied access to payday loans, while up to 30pc said they would ask family
and friends for help.

The regulator plans to introduce a price
cap of 0.8pc per day on short-term loans
and an overall ceiling on
charges set at 100pc of the loan value from next year in an attempt to curb
the proliferation of lenders that offer debts with excessive interest rates
and punitive charges. Firms must also apply for FCA permission to offer
consumer credit.

A competition
investigation by the Competition and Markets Authority
in June found
that the average customer takes out six payday loans a year.

“If a consumer has one loan application declined, it does not necessarily
mean an application won’t be approved by another lender elsewhere,”
said an FCA spokesperson. “Not all lenders offer loans for the same
amounts, rates or durations. A decision to lend will vary between lenders
based on how they assess credit risk, their appetite for risk and the amount
of capital available to lend.

“The FCA also expects all lenders to carry out appropriate affordability
checks to ensure that people can afford to pay back what they borrow.”

The FCA and CFA polls both found that users of short-term loans often have
mixed feelings about borrowing in this way. The FCA found that 41pc of
first-time borrowers regretted taking out the loan, while 44pc of the CFA
respondents said they would feel better off if they no longer had access to
short-term debt.

company Wonga announced
earlier this month that it was
writing down £220m-worth of customer debt after reviewing its affordability

More here:
Four in ten borrowers get a payday loan even if one lender rejects them

Comments are closed.