Living costs across the UK are straining all our bank balances. In the post-Christmas period, many of us feel the pinch, and sometimes we struggle to make ends meet.
Payday loans can help you out of a tough spot. Just choose the right short-term loan direct lender to reduce your risk. Predatory payday loans can turn a bad situation into a literal nightmare, but they are easy to spot.
Let’s take a look at some warning signs. Trust your instincts and use this overview as a guide.
Vague Repayment Information
Your contract details, terms and conditions must be clear. They should give you as much information as possible, and lenders must ensure you understand it. Vague repayment terms are one of the main payday loan complaints at the Financial Ombudsman.
The lender may lack the legal resources to draw up a professional contract. They could also leave things murky on purpose to confuse you. This makes legal action on your part harder if things go wrong.
Minimal Online Presence with Few Reviews
Dig into the payday lender using online resources. Check comparison sites, online reviews and social media. Little to no reviews can be a greater warning than negative reviews – the lender may hide their shortcomings on purpose.
Search reviews with specific keywords. Reviews mentioning rude service, unclear terms or high fees should send you in the other direction.
Lack of Proper Registration
Payday loans are well-regulated in the UK. Years of undeserved freedom resulted in financial peril for many people. Now, there are strict rules payday lenders must follow to stay compliant.
Check their website for affiliation with regulatory bodies. Financial Conduct Authority (FCA) registration is an essential stamp of approval. Check the lender’s details in the FCA registry.
Insufficient Warnings in Their Marketing
All marketing communication should carry a warning of sorts. This could be in a footnote or in the message itself. Responsible lending requires both parties to have all the facts.
Payday loan lenders should make clear the default fees you could incur. The APR should be crystal clear. You should know how failure to repay could affect your finances and credit score.
Grammar and spelling mistakes could reveal a lack of professionalism. Of course, all of us can make errors, but financial professionals should properly review their communications.
Are they truly qualified as a lender? The emergency nature of payday loans may make you miss these warning signs. Try calling them to assess their helpfulness, knowledge and professionalism
Zero telephone contact could leave you stuck. Live chats have their place, but in an emergency, you may wish to speak to someone on the phone.
High Upfront and Early Repayment Fees
Look for upfront costs, as predatory lenders may add these to your total. These costs, if present, must be transparent and itemized. Many payday lenders ask for an upfront fee, for admin or otherwise, but these should be minimal.
Another warning is a high early repayment fee. This shows the lender seeks profit first, and they may even want you to default on the loan. The best payday loan lenders let you repay at any time.
Payday Loans Can Help You Manage Tough Times
Payday loans offer emergency funding when you need it, and there are plenty of responsible lenders in the UK market. Check all the above and get the information you need.
Make sure you have no other alternatives for short-term lending. Friends and family could help too, but when you need cash fast, payday loans remain a viable option.