Payday Loans Are Legal

Posted on February 5, 2012 by creditwindow
Are payday loans legal?

Are payday loans legal? Find out for yourself...

The question over the legal nature of payday loans has been passed to-and-fro between politicians and financial regulators ever since this form of short term loan hit the UK, back in the early Millenium.

Payday loans have been called into question largely due to their large Annual Percentage Rate (APR) and the fact that most payday loan firms are willing to lend to people with poor credit, previously unheard of in the unsecured loan market.

Payday Loan APR – Why It’s Misleading To Customers

It’s important to remember that a payday loan APR is subjective – it’s essentially a short term loan that’s taken out over the course of a month. This means that the APR (which is measured over a 12 month period) is actually misleading to customers.

Payday loan regulations state that an APR needs to be clearly displayed on the company’s website. The only real problem with this is down to the fact that a customer will usually repay the loan by the end of the month… so the interest accumulated will be a fraction of what the actual APR is.

For example, you will end up repaying £125 back – this is only at interest rate of 25%. This is a minor amount compared to what you would repay on a yearly loan. In fact it’s equivalent to a standard unsecured loan with a 25% APR.

Payday Loans – For People With Poor Credit

Payday loan companies can and do lend to people with a poor credit history. Let’s face it – many people go through a tough time and it’s not always their fault. They may have lost their job or had unforseen expenses they may not have been able to meet. Payday lenders don’t believe these people should be discriminated against because of a mistake or an unfortunate circumstance.

This is why payday loan firms will lend to customers with poor credit scores. They will accept a customer’s word that they will repay the loan at the end of the month and will make concessions if the customer struggles to repay it in one go. This is usually referred to as a deferral – where the payday loan repayments are split down into monthly manageable repayments.

Payday lenders are not demons – they’re not there to charge you bucket loads of interest at the end of the month. Essentially, as long as you’re honest and up-front with them, payday loan firms can be very understanding – or at least as understanding as a lender can be.

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Debt Management – Simplified

Posted on February 1, 2012 by creditwindow
Debt Management - Simplified

Working out a debt management plan can be tricky - whether you're considering an IVA, a debt consolidation loan or a debt management plan.

Debt can be quite overwhelming – especially if unexpected changes to your personal circumstances have an impact on your income or if you have to end up paying out more than you are able to on a regular basis.

Many of us have been there – you can only tighten your belt so many times before you’re faced with a spiral of debt. Fortunately debt management programmes can offer a way of controlling debt – especially if you are facing endless payment demands.

Debt management helps you to manage your debt more effectively and gives you the breathing space you need to repay outstanding debts and get your spending back under control.

Whilst debt consolidation is probably the best known debt management plan there are other types of programmes, including a standard debt management plan and an Individual Voluntary Agreement. Let’s take a few minutes to look at the three different plans available and the merits of each:

Debt Management

A debt management specialist will work with you to take an in-depth look at what money you owe and who you owe money to. They will then talk with the companies you owe money to, and try to get them to freeze the mounting interest payments so that your debt doesn’t worsen. They will then ask the creditors to accept regular, sometimes  smaller repayments (in some cases they may even be able to write off some of the debt).

Debt management specialists will handle all letters and demands for payment from your creditors, which can also really help to relieve the stress of debt.

The debt expert will also help you to work out what your monthly income is and what you can reasonably allow for living expenses, to show what you can realistically afford to repay. In addition to this they will help you to allocate that money between your creditors. The idea is that you will only make one affordable payment each month, and the debt management company will use that payment to make payments to various creditors on your behalf.

It should be noted that there are no guarantees that the firm you owe money to will agree to freeze interest rates or reduce your regular payments, let alone write off any of your debt. In some instances companies may still charge additional interest or penalty fees.

Whilst your monthly payments may reduce, you could end up paying a larger total amount over a longer period of time, in order to make it affordable for you.

Debt Consolidation

Debt consolidation works in a very similar way to a debt management plan. The emphasis is on “consolidating” all your existing debt into one manageable repayment plan. This is known as a “debt consolidation loan”  - this includes all debts plus and early repayment fees you may incur. So all your existing debt is essentially paid by the debt consolidation firm so your only obligation is to pay them a manageable lump sum every month.

Individual Voluntary Agreement

In addition to these two there is something known as an “Individual Voluntary Agreement” (IVA) that is a more formal acknowledgement of your financial difficulties, however, it works in the same way as a standard debt management plan.

An IVA is essentially a legal agreement between the creditors and yourself. You basically agree to repay the debt over a set period of time (around 5 years on average). By the end of that agreed period your creditors will accept that they cannot obtain any further money from you – even if you haven’t repaid the debt in full.

If you are struggling with debt its worth looking at what your options are and, if necessary, look at a debt management / consolidation plan to help you meet the demands of your creditors.

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Payday Loan Debt – How To Deal With It

Posted on January 11, 2012 by creditwindow
Payday Loan Debt - How To Deal With It

Payday Loan Debt - How To Deal With It

Whilst payday loans can be a great way of helping you meet unexpected bills or helping to cover unforseen emergency costs over the course of the month, as well as a very convenient, quick way of getting a short term loan, there is always the risk of getting into debt easily, especially with the high interest rates associated with payday loans.

But what can you do if you do get into payday loan debt? Check out our top tips:

1. Work out a payment plan with your payday lender. Believe it or not payday loan companies do not want you to get in trouble with debt – it looks bad for them and it’s not so great for you. Most compliant payday lenders will work out a reduced repayment plan to help you meet monthly costs. This is what’s known as a “deferral” in the payday loan business.

2. Work out your monthly budget. Try to work out what your monthly outgoings are (i.e. utility bills, food costs, travel costs, etc), excluding your payday loan debt. Then simply subtract your outgoings from the overall amount you take in every month. That leaves you with a pot of money that you can dip into to repay debt – but remember you should only pay back what you can afford.

3. Cut out those things you don’t need. It’s easy really – by cutting out things like that weekly take-away, that 4 pack of beer or other luxuries, you will have more left over at the end of the month. More money that can go towards repaying your payday loan debt.

Remember – never ignore your debt thinking it will just go away. That’s not going to happen. If you’re struggling with payday loan debt then you need to face it head-on and resolve it as quickly as you can.

In addition to this you should avoid borrowing any more money until your existing debt is repayed. That doesn’t just include payday loans but should also include bank overdrafts, credit cards, unsecured loans and other forms of credit.

If you do end up taking out additional loans or borrowing money on your credit card you could end up with debt that is simply unmanageable. In which case it is important that you seek the guidance of a debt consolidation expert. If you are looking for debt consolidation services then you should look to the likes of MoneyExpert to help you out.

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Mortgage Holders Turn To Payday Loans

Posted on January 9, 2012 by creditwindow
Mortgage Holders Turn To Payday Loans

Mortgage holders and tenants are turning to payday loans, credit cards and short term loans to help meet the monthly costs.

A survey by homeless charity Shelter has revealed that almost 1 million mortgage holders took out payday loans to help meet mortgage repayments last year.

The survey went on to reveal that a whopping 7 million people in total were dependent on some form of short term loan, credit card or unauthorised overdrafts to help meet the costs of their mortgage or rent.

Shelter have suggested that by turning to the likes of payday loans or credit cards could well see more and more people spiralling into debt.

The Charity’s CEO, Campbell Robb, commented:

“Every two minutes someone in Britain faces the nightmare of losing their home. We urge every single one of these people now relying on credit to urgently seek advice.”

Creditwindow suggests turning to the likes of the Consumer Credit Counselling Service or Money Advice Service to seek advice on managing debt and to look into new ways of controlling spending to meet monthly needs.

If you are looking for a debt management programme it may be worth looking at what the likes of MoneyExpert have to offer.

Image: Idea go / FreeDigitalPhotos.net

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Managing Debt Effectively – Its Easier Than You Think

Posted on January 6, 2012 by creditwindow
Managing Debt Effectively - Its Easier Than You Think

Managing Debt Effectively - Its Easier Than You Think

If you have mounting debt in the form of credit cards, personal loans, backed-up mortgage repayments, etc, then it can be a really daunting task when it comes to paying it all off!

So what can you do to help make managing your debt easier? That’s a good question and it’s not always the easiest one to answer – usually people opt to approach a debt management service, however, it’s important to consider all your options first.

What This Article Is

This article is a resource to find out how you can get your personal debt under control, offering free and impartial advice.

What This Article Is Not

This article, although will offer recommended firms to help manage debt, is not solely focused on this. It should be made very clear from the start that debt management programmes can benefit some people but is certainly not appropriate for everyone.

Don’t Ignore Your Debt

1. Try To Meet At Least The Minimum Repayments

2. Debt Counselling – some charities offer free debt counselling to people and they can give excellent advice. Try talking to the Consumer Credit Counselling Service.

3. Increase Your Income – whether that means getting an additional job, finding a new one or even asking for a pay-rise.

4. Consider switching utilities providers (gas/electricity) – shop around and see what’s out there!

5. Remortgage Your Home Or Trade It In For Something More Affordable.

6. With the ever growing price of fuel you could consider downsizing your car to a more economical model.

7. Stop gathering new debt – cut up those credit cards and stop taking out loans!

8. Cut out those vices – consider giving up cigarettes, alcohol or whatever (on average a pack of 20 cigarettes costs £5 – £6 a time – think about how much you could actually save in the longer-term!)

9. Prioritise your debt payment – get the most urgent debt paid off first.

10. If all else fails you could consider a debt consolidation plan where you consolidate all your existing loans, credit card debt, etc, into one, easy to pay, lump sum.

What Is Debt Consolidation?

Debt Management or “consolidation” is simply a method of putting all your existing debt (i.e. credit card, loan, mortgage, debt) into one lump sum.

In effect a debt management company will arrange a repayment plan where you pay everything off over a period of time. Usually you will find that the debt firm offers a good rate of interest (APR – Annual Percentage Rate) that will help keep repayment costs reasonably low – as long as you keep paying it on a regular basis.

As long as you avoid getting into more debt (cut up those credit cards or at least hide them away!) you should have your debt paid off reasonably quickly.

However, whether you take a debt management plan or not, it’s certainly worth following the ten points mentioned previously as this will help cut spending and help you live within your means.

Find a debt management plan to suit you

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Wonga Payday Loans – What Makes Them Different?

Posted on January 3, 2012 by creditwindow

Wonga Payday Loans - What Makes Them Different?

With the growth of the payday loan market in the UK Wonga is probably the best known out of all the major players – thanks largely to their television advertising.

In truth Wonga’s television advertising and Viral marketing campaigns are probably the only things that really set them apart from other payday lenders.

If you look at the average payday loan television advert out there by the likes of QuickQuid and PaydayUk, as just two examples, the advertising campaigns tend to be pretty dire, only matched by the likes of those Cash 4 Gold adverts.

Ok, I’m probably being a little unfair to Wonga – there are aspects that do set them apart from other payday loan firms. Let’s take a look at a few:

Wonga are probably one of the only payday lenders that really are up-front about the amount they charge people. It’s fair to say they were ground-breaking in introducing people to their “slide-bar calculator” that effectively tells you how much you will need to pay back if you choose to borrow the amount you specify.

Wonga will only lend smaller amounts up-front – for instance they publicly state that the maximum amount you can borrow (as long as you can repay it) is £400. In comparison some payday loan firms actually state that they lend up to £1,000 – grossly misleading, especially since many lenders will not actually lend this amount the first time round. Wonga is at least transparent in this regard.

Wonga’s interest rates are lower if you borrow a payday loan over a shorter period of time – the lower the interest rate will be. For example, most payday loan companies fix the length of time over a monthly period so you are obliged to repay the loan with the full month’s interest. With Wonga you can actually specify the loan period – pretty flexible if you ask me.

So are Wonga the same as every other payday loan firm? Well – they are still a payday loan company – whatever else they claim to be, however, they do have a number of differences that make them stand out. Would I borrow from Wonga if I needed to? Probably.

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Payday UK – A Quick Review

Posted on January 2, 2012 by creditwindow

PaydayUK - a quick review

Payday UK is basically a “brand” or “trading name” of MEM Consumer Finance Ltd, a payday loan company that’s been offering short term loans of £80 – £750 over the course of a month since 2003.

Payday UK is one of the longest established payday loan firm in Great Britain and probably one of the most trusted in the market.

The firm tend to be very up-front and honest about their fees, charges and what they look for in a customer.

Payday loans offered through this company are for people who need to bridge the gap until payday – whether the loan is to help meet an unexpected bill or some emergency expense.

Let’s take a quick look at the average PaydayUK customer – i.e. what they look before agreeing to lend you money:

1. You need to be over the age of 18
2. You must be in permanent employment
3. You must earn a minimum of £750 per month
4. You must have a bank account with a valid debit card
5. You are paid monthly

Other than this it should be pointed out that PaydayUK will not target people with existing debt problems and they only lend to people they believe can repay the loan.

If you’re looking for a payday loan you could do worse than looking to the likes of Payday UK.

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Payday Loans On The Cards For Millions Of Brits

Posted on December 24, 2011 by creditwindow
Payday Loans On The Cards For Millions Of Brits

Insolvency experts are expecting to see an increase in British consumers taking out payday loans over the next six months or so.

With the impact of high inflation, low income and high unemployment, many British consumers are expected to turn to payday loans to last them until payday, insolvency experts have claimed.

Insolvency experts, R3 have reported that they expect the number of people taking out payday loans to increase based on the responses of 2,000 people.

The survey by R3 showed that 60% surveyed were concerned about their level of debt and, probably more worryingly, 45% struggled to make their money last until payday. This actually increased to 62% for 24 – 44 year olds.

The £2 billion-a-year payday loan industry is thought to be a cheaper alternative to than going overdrawn or facing a credit card charge, hence why they are becoming more popular than ever.

However, consumers are urged to ensure they re-pay the short term loans back as quickly as possible, otherwise they could end up facing more expensive roll-over, monthly charges – known as deferrals in the industry.

With the increasing number of people turning to payday loans, otherwise known as payday advances, both politicians and insolvency practicioners are becoming increasing concerned about the number of people falling into debt. As a result they have called for a standardised industry code of practice to be introduced to help ensure that customers are treated fairly.

In spite of this the majority of authorised payday lenders, such as Wonga.com, PaydayUK and QuickQuid, are members of the consumer finance organisation, an authority that strives to regulate payday loan firms and other financial organisations that are not necessarily controlled by the Financial Services Authority (FSA).

This writer has a feeling that 2012 will prove to be a very interesting year for payday loan firms, especially now tighter regulations are being called for from all sides…

The Slice

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Economically Did David Cameron Make The Right Decision For The UK?

Posted on December 17, 2011 by creditwindow
Economically Did David Cameron Make The Right Decision For The UK?

Economically Did David Cameron Make The Right Decision For The UK?

Following David Cameron’s refusal to sign the EU treaty, the question over whether he did the right thing for the UK has been debated to quite an extent over the past week or so and many still appear unsure.

Let’s take a look at a quick summary of Mr Cameron’s decision:

The EU treaty promised no concessions to the UK yet Europe wanted the UK to help bail them out of a mess created by the european currency.

If David Cameron had signed the treaty the UK would have resulted in the UK submitting our entire national budget to the European Commission. In essence we would have been relinquising our sovereignty to an all-powerful European super-power.

Mr Cameron’s decision not to back the treaty was to protect British interests – not European.

Even pro-European, Nick Clegg supported David Cameron’s decision on this by commenting:

“The demands Britain made for safeguards, on which the coalition government was united, were modest and reasonable. They were safeguards for the single market, not just the UK.”

The important thing to note in all of this – in spite of the state of the Global economy, The UK is still a financial super-power with a large percentage of the World’s market operating from London. Allowing Europe to take control of our national budget would be, not only economic suicide, but would also lead to a loss of our identity as British citizens. We would merely become citizens of a European super-state.

Call me a euro-sceptic if you like but let’s face it – would you want to be lumped into a european economy with the poor state of the likes of Greece and Portugal?

Irregardless of that it is important to note that David Cameron does support the need for stability for the european economy (euro) as it is in the UK’s interests.

I’ll be watching this space over the next 6 – 12 months. Let’s hope David Cameron doesn’t buckle under pressure… or worse, lose the election to Ed Milliband. Then we’d all be screwed!

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