Since payday loans were illegal in the state of Colorado, the scheme started to receive the legal attention it deserved. The Internet makes it simple to close up shop and disappear almost instantly. In addition, car title loan borrowers get to keep using their car even while making payments as to make life even simpler. Phishing sites are designed to collect personal information on you such as your name, social security number, phone number, and bank account numbers, etc. But I don't think half of the people who get them know what questions to ask the companies. Two million people are said to use them in the UK, borrowing from hundreds of different lenders on the high street and online. Though I've never been in the same situation as Josh I do understand exactly what it's like to have serious money problems.
· The Truth About Payday Loans Advertiser Disclosure May 29, by Christine DiGangi A payday loan is a short-term, high-interest loan, generally for $ or less, that’s designed to bridge the gap between zwrot-podatku.cf://zwrot-podatku.cf /loan-articles/the-truth-about-payday-loans. · Payday loans are attractive but if you think they are safe you are wrong. Title Loans are a MUCH safer loan and read on to find out why For those who live paycheck to paycheck and need quick money to pay a bill, fix an appliance, or just put food on the family’s table, payday loans have seemingly been one of their only zwrot-podatku.cf://zwrot-podatku.cf The Truth Behind Payday Loans. August 14, - by aryaan - Leave a Comment. Payday loans are sometimes considered when a person is struggling to balance their income and expenditure. More often than not, this is occurs on a month-by-month basis, although some people zwrot-podatku.cf
Even though there is less money to go around, the cost of living is still rising, but there's less money available to pay these bills than it was before. And these payday loan companies that seen over there at the high street have spotted a gap in the market over the last few years. And they have filled that gap very effectively and very ruthlessly.
When asked, whether the gap was the immediacy that people have got used to now, Dennis says immediacy is one factor. Other than the immediacy, what has changed is that in the past people might have been able to get more assistance from the benefits system, crisis loans, and short-term help. That assistance is being reduced, so people have to turn elsewhere. The money is still needed. Where do you go for it? You go on the high street or you go hungry or cold or both. I have come to Swansea. It's another area struggling with the effects of the recession.
And also home to Serai who for the last two years has found it hard to ignore the avalanche of payday and doorstep lenders offering to solve her money troubles. Serai has been living in Swansea for more than 4 years. She grew up in Chatham, the area on the other side of Swansea.
Miquita asked Serai whether over the past 4 years she has noticed people talking about these kind of companies more and more, and generally just feeling that more people are involved with them.
Serai agreed that everybody's talking about it. She sees different people at all times saying they have got a loan, and they owe this much to Wonga or Provident or anybody. Serai and best friend Katrina are both members of a group for young mums, most of whom are affected by bad debts. There are nine ladies in the group, out of which give have taken a loan from payday loan companies. And the worst part is that none of those five have jobs.
They were offered loans on their benefits and tax credits. According to Miquita, what is absolutely ridiculous is that they are called payday loans. They weren't even working, so this wasn't their payday, but it was their benefits paying back. Miquita was curious whether the lenders even try to find out if they were actually working?
Serai responded that they'd ask first off, whether you are working or are you on benefits. And then they will just take in how much the borrowers actually received in a week or a month, and they would be fine with it. Miquita found it surprising that being on benefits was never seen as a negative. As long as the lenders see a certain amount coming in, they are fine with it.
Serai and Katrina both got into trouble as their first Christmas as single moms approached and they started receiving text messages and leaflets through the door offering them loans.
Serai feels the payday lenders know that Christmas is the most money making time for them. The lenders know that people in the circumstances of Serai and Trina, especially if they've got one or two more kids, will need money. And these people are going to struggle, so the lenders start targeting. Serai says they made it looks really easy. You borrow this much and you pay this much back in 30 days or however many days, and it looks really, really reasonable until you've got to pay it back.
When asked about how do you deal with a situation when you have to pay back, Serai said they had no option but to borrow more money. Whilst trying to provide for their young families, both girls now find themselves with bad debt problems.
Serai's problems have led her to nearly having a breakdown. She was really depressed. She couldn't leave the house, and she couldn't face anybody. Her kids were in the house every day, and she felt like ending it. She was really depressed, it was so bad. And it was because of all the debt, she felt like she was going to do something to my life. She was terrified, she was scared, and she was on my own.
Miquita feels that both the girls were getting payday loans to help them feel independent and be able to look after their families on their own. The girls freely admit they shouldn't have borrowed the money but they believe that the companies targeted them when they were most vulnerable. And when someone's offering what seems an easy fix, it can be hard to say no. Cases like these are one of the reasons why the payday loan industry is now under so much scrutiny.
People like Serai who can't afford to pay the money back have ended up taking out another payday loan and another just to keep their head above water. It's what's known as a rollover, and it's these loans that make lenders the most money -- in fact almost half of everything they pocket. I want to know how some of these companies decide who to lend to in the first place.
And I've been put in touch with someone who is ready to expose their secrets. For six months he worked for one of the high street lenders and experienced their strategy first hand. He quit but he doesn't want to be identified as he is still worried about repercussions.
The ex-employee says there no rules whatsoever regarding vulnerability, and it wouldn't matter if they came in and they looked like they had a shelter.
If they had a bank statement and an ID, and if they applied and got accepted the lenders would give them that loan. He remembers in his first week of work that he was corrected by his manager.
His manager said that as soon as the borrowers said they were not working, they should be asked if they have got any children, because then they might be getting tax credit. So these were people who were struggling to feed their children. He only worked in one store, but hearing from our whistle-blower has confirmed some of my worst fears about how some of the industry works.
He soon ran into trouble and couldn't afford to repay it. But the lender wanted their money back. Chris says that the payday lenders weren't prepared to reduce it to a manageable amount, and they weren't prepared to give him a repayment plan. Chris was living with his parents at the time. His parents came to know about the loan, when the payday lenders started coming, they made phone calls, and they were sending letters. They were threatening to send bailiffs and that they would repossess their property and their house.
The property belonged to Chris' parents, and obviously the last thing they wanted is bailiffs coming and taking their stuff to cover a payday loan taken by their son. So this started arguments between Chris and his mom, and between Chris and his step dad as well.
And it just got to a point where they didn't want Chris in the house. So after a while it wasn't even about the money anymore. The pressures of the dealing with his illness combined with the stress of the barrage of calls and letters to his parents' home led Chris to breaking free.
Pointing towards a bridge, Chris says that one night he ended up here. He felt like he had nowhere to turn. Miquita asked Chris whether he reached this point emotionally because of the things that happened. Chis says that with everything that was going on, he just could not bear to live. He says, he didn't think of it or it wasn't premeditated, but he climbed across the bridge and he was on the external side of the bridge. He was holding one of the pipes connected to the bridge, and he was ready to let go.
Chris was very emotional, and he was crying, but there was no fear. He was very prepared to let go. To him at the time it was scary to think that he would have to wake up the next day and to deal with the payday lenders all over again. Chris, his family, and the medical professionals -- all agree the final straw was the payday loan company and that's what pushed him to attempt suicide. Chris was sectioned for his own safety in a secure hospital, but even there he found the payday loan company refused to leave him alone.
He was in a psychiatric hospital for just over four weeks, and even there he was getting phone calls. The first thing they would say is can you make a payment today. And Chris apologized to them continuously, saying that he didn't have access to a debit card. Miquita wanted to know if the lenders knew what kind of an establishment they were finding Chris at. And Chris says, he did explain to them that he was in a psychiatric ward.
He just couldn't pop out cash. He told the lenders that he couldn't even pop to the local shop just around the corner, and that he was on that ward for my own protection.
He told them he was surrounded by big huge electromagnetic doors, else he would have broken free weeks ago. He had to plead that he couldn't get to the bank. With the help of Citizens Advice, Chris' lender eventually agreed to a debt plan, allowing him to pay off a pound every month.
I'm feeling quite shocked after what we're finding out. I am actually quite angry because these payday loan companies are giving out loans to people who were not in a financial position to ever pay them back. Like someone like Serai should never have been given a loan. And then when they can't pay them back, they are being harassed and pressured to the point where they're actually contemplating taking their own lives, someone like Chris. And it just feels like the payday loan companies have absolutely no regard for their customers or take any responsibility for the position that they are left in.
Attitudes towards payday lenders have begun to change. An official report three years ago said they provided a legitimate useful service that helped to cover a gap in the market.
But this year the Office of Fair Trading said that there was widespread irresponsible lending in the industry and all over the country the fightback has begun. People protested that payday loan companies offer instant cash with no background checks for extortionate rates of interest.
It's predatory, it's predatory lending. Someone who's definitely had enough of the worst of the industry is Julian Rubenstein. In , on one of his shows, Julian caught on camera how some lenders do only the most basic checks about whether you can afford to take out a loan. And they didn't seem to be bothered about how you'd spend. Julian mentioned one of the lenders that he needed the money to pay back some gambling debts and some drug debts, and if that is alright.
To Julian's surprise, the lenders said that as long as they got paid back they didn't care with what he was doing with the money. Julian says that when he mentioned about him being a drug dealer, he thought that would raise a red flag with the lenders. It shocked him that it didn't make any difference to the lenders.
When you start saying to people I'd kind of pay back to you in weed, and then they're like no you can't but when would you like an appointment.
Anyone in their right mind presented with that would think that this person is unstable, this person is not really the sort of person we should be giving loads of money. This business is entirely dedicated to profit at all costs. Absolutely nothing matters apart from the 1's and the 0's.
But a lot has happened since Julian's filming. In March this year, the Office of Fair Trading told the 50 biggest payday loan companies they needed to clean up their act and stop running misleading ads. They should make sure they give clear information and better check that borrowers are able to pay back the loan. To find out I'm going to go undercover to see if some payday lenders are still breaking the rules.
It's nothing like anything that Miquita had done before and she was terrified. For moral support, she had taken an old acquaintance along with him. With nine payday loans to his name, Josh is better placed than most to help Miquita get the answers that she needed.
And it did seem the crackdown on payday lending is making a difference. Some of them said they no longer offer payday loans. And they were very open about why. One lender informed about how payday lenders have been in the news for unfair lending and all of that. It didn't matter what the borrowers are spending their money on. Borrowers could do whatever they wanted with the money as long as they paid it back.
For example when Josh mentioned to one of the lenders that he needed the money to repay drug debts, the lender responded that why he needed the money was none of their business.
So if it was a young kid, who was quite blatantly borrowing money so he could buy drugs shows a complete lack of responsibility to say, no we don't care about what you do with the money, it's up to you. More than half of the shops we asked would still give a payday loan as long as they were getting money coming in from somewhere.
The payday lenders didn't care if the borrowers had a regular payday, and they were more than happy to lend against benefits. One lender was ready to provide a payday loan even if the borrower was not working, as long as they had child tax credits. They saw no problem in using the money provided for feeding kids.
Most surprising of all was that Miquita and Josh still rarely got any explanation of interest rates or of how the cost of the loan could spiral. That's something they all should be doing, but instead some downplayed the APR saying it's not relevant for this type of loan. Since it's only a payday loan, it's only until the next payday.
One shop did try and spell out the math, but unfortunately they got it wrong. No one is saying that these sums are easy but if borrowers are relying on the payday lenders to explain things, they should get it right.
Very few lenders did everything by the book. But with no two of them operating in exactly the same way, it seemed like some of them were almost making it up as they went along. And it was unbelievable that even after all the flak they've been getting, some of them still didn't seem to be lending responsibly. Miquita wanted to hear what the industry itself has to say about how they lend money. She tried finding this through an organization that represents most of the payday lenders.
As per Rhiannon, the payday loan industry has grown up under the spotlight. She tried to highlight the positives that they see on a day-to-day basis. She agrees there is some bad practice out there, and assures that her organization is working quite closely with the regulator to make sure that that's eradicated.
Miquita wanted to know about the kind of checks done by the members of CFA do before lending money. She asked whether it was really possible to do the right type of checks within 10 minutes and finding out whether someone had the right affordability. Rhiannon says the checks with the credit reference agencies happen within a split-second.
And with the online databases the payday lenders can get that information immediately. This is similar to what credit cards do. The difference is the speed that the money lands into the borrower's bank account. When asked whether people really understood APR, Rhiannon said that APRs are misleading because they are annual, whereas payday loans are very short term. Payday lenders are committed to showing it, and they have to show it because its regulation.
And they are talking through and explaining it to the borrowers, but they'll also tell the borrowers what the cost of the loan is in pounds and pence. Miquita shared that there are some people who are a bit skinned and they are on child benefits and JSA, and the last thing they need in their life is a payday loan. Rhiannon's response was that it's a difficult one.
Because if the borrowers have income and expenditures, and if they can afford to pay back the loan once they have taken out and they need it then the lenders can't decide whether or not the borrowers are right to have the access to credit.
The borrowers obviously needed it for a reason, for purpose whatever it may be, whether it's an emergency. So Rhiannon's argument was that where would such borrowers go if they couldn't access a payday loan. When asked for an opinion on if the loans are not given out irresponsibly in the first place, Rhiannon said that it's important that the loans are only lent to people who can afford to pay them back.
Rhiannon makes it all sound very positive as does Wonga. The biggest in the business told BBC they don't see themselves as a payday company because their loans have more flexibility.
Like some other lenders they also freeze interest rates so it can't spiral, and they limit the number of times a loan can roll over. But even so, I've seen with my own eyes the devastating consequences when lenders don't stick to the rules. And I've met people who will be paying off their debts for years to come. But there are others who won't get that chance. His friends shared with Miquita, that they played rugby with Kenny ever since they were seven or eight years old.
One of the friends described Kenny as a funny and crazy. He knew that Kenny was in debt, but didn't know the extent of the debt. According to another friend, after Christmas of , Kenny was living with his uncle so he couldn't work, and that's why the spiral obviously went down from there. And that's when he probably first took out a loan. Because he didn't have work for weeks, he was going down that lane of spiralling debts. With spiralling debts Kenny couldn't see a way out. Said to owe thousands to payday lenders, he took his own life in the very field he played rugby.
His friends are in no doubt that the lenders Kenny borrowed from share some responsibility for his death. Miquita points out that such a dark thing has happened, and such a tragic thing has happened.
And it's quite strange that in the adverts are so jolly and colourful. The friend agrees, that in the ads they don't show you that people are crying and they can't afford to feed the families. And that you should go only as a last resort to one of these companies. Love them or loathe them there is no doubt payday loan companies offer something that traditional banks can't and won't compete with.
And when they behave responsibly some can offer an invaluable service. But there are other places you can go to source a less risky short-term loan. Struggling with debts through doorstep and payday lenders, Serai and Katrina, the Swansea mums I joined earlier have joined a local credit union, a sort of a community bank.
They visited the Swansea's credit union to find out a bit more about them. Miquita points out that the interest rates charged by credit unions are extremely low when compared to payday lenders. And credit unions also put quite a lot of emphasis on saving the money, and helping get borrowers in a savings habit. There are over credit unions across the UK, offering savings and loans to their members.
Most now offer current accounts, and a few even offer mortgages. So far over 1. The guy from the credit union explained that the loans are a lot cheaper than a payday loan company. They only charge 2 percent interest a month, which is totally different from a payday loan company. The thing with our loans is that we take time in looking at and making sure people can afford them rather than just approving straightaway.
Swansea moms aren't the only people I've met now reorganizing their finances. Miquita checked with Lauren if she's angry that this thing has happened, even though it was her choice, but whether she is angry that this is now a part of her story. Lauren says, life isn't all roses that doesn't go exactly as planned.
At the same time, she did her best when her mom went absolutely ballistic at her. And obviously she has not taken any payday loans since then. For the last few months, she has got from one end to the other end of the month, and she has had money at the end of it.
That feels really, really good. But the one I am most pleased about is my Rochdale friend, Josh. Josh has signed up with a payday loan agency after they did the secret film and they have got him a job. The best part about the job is they have offered a manageable debt repayment plan, which means basically they freeze the interest, which is a good thing.
And they work out what he can afford each month, while also managing his living expenses. So he can pay off his debt, but still has money to live at the same time. And now, he doesn't get phone calls or letters. Miquita asked that now that he is working with payday loan shops, has his perspective changed about these shops. Josh says earlier it was embarrassing walking past payday loans, because they knew that he owed them money.
But now he can walk past them and they know it is going to be paid off. Hearing about the problems caused by payday loans, it would be easy to say lenders need to be reined in more, and in the worst cases maybe even stopped from trading. But some of them do play by the rules so when trying to decide who's responsible for all this I can't help thinking there is blame on both sides. Anyone who takes out a payday loan of course takes full responsibility for taking out the loan.
No one forces anyone to take out a payday loan. But I don't think half of the people who get them know what questions to ask the companies. And it's absolutely up to the payday loan company to give out the right information because it terrifies me that if people aren't getting the information then they are going to continue to get into actual real trouble with companies they thought were there to help them.
Discover the truth behind some of the most common myths surrounding them. Many people who develop a poor credit rating feel trapped because they think they cannot pass the dreaded credit checks, but in reality there are several different types of bad credit loans that can help out people when they are stuck between a rock and a hard place financially: Although they both fall under the category of bad credit loans, they differ in many ways.
Car title loans, also known as auto title loans, are loans that use a borrower's car as collateral. Because the loan is secured by the vehicle's title, lenders offer much more money than they would with payday loans. Lenders only require the title, not the vehicle itself, which means that borrowers can still drive their car while making payments.
In contrast, payday loans are unsecured bad credit loans. Risky for lenders, they are reluctant to lend out much cash. However, it is a viable option people turn to when they do not own a car.
There is a lot of literature out there on the web about how these types of loans are just rip-offs designed by lenders to take advantage of desperation. They are only scams when people do not do the research to learn how to avoid bad credit loan scams.
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