The payday loan cycle traps consumers
Although the phrase “cycle of debt” is a favorite among critics, its truth isn’t based on it. Approximately 70-80% of payday cash advance customers are reported to use cash advances once a month or less frequently by researchers and state regulators.
An advance on your payday should not be considered a long-term loan “직장인대출”. Providing emergency support to millions of families has been a payday loan’s main benefit. This means that a payday advance is only given if payment is to be made on the following payday of the applicant (thus the name payday advance). Additionally, some short-term lenders offer rollover services to help keep loan applicants from becoming trapped in a high-interest loan.
Loan sharks are all in business
If your payday loan company is reputable, it will not exploit consumers. The loan is intended to be used by employed people in short-term emergencies between paydays. Families who live pay check to pay check are likely to face this issue when emergency repairs, travel, and medical care become necessary. Payday loans fill a crucial void in the economy.
In order to compete, payday loan companies need to emphasize other aspects of their service rather than the price of the loan. Customer service and making sure all employees are knowledgeable as far as finances are concerned ensure that all employees are qualified for the job, and ensure that customers receive excellent service. Moreover, monitoring and recording of telephone calls into and out of the company enhances the effectiveness of these efforts.
Target the poor and vulnerable
The market for payday advances focuses exclusively on subprime clients without distinction of employment status or culture. Payday loans are usually targeted at income ranges of £10000 to £25000. The majorities of payday advance applicants is under 45 years old and are employed with steady incomes. They also have an active checking account. As a rule, payday advances are meant for working adults with immediate emergency expenses not covered by banks or unions.
Fees are hidden and interest rates are high
All fees, interest rates, and other charges related to payday cash loans are required by law to be disclosed. According to the Office of Fair Trading, it is legal that all fees and rates be clearly outlined and disclosed to customers.
A payday loan has an extremely high interest rate. There is no motive for the lender to take advantage of the situation because they are a short-term lender. Unlike long-term loans that must be refinanced every month, payday loans are short-term loans. By an equal profit level, payday loan companies assume greater risk.
Committed coercive collection practices against customers
Whenever a past due account is collected, it is done in a fair and lawful way that does not involve any criminal acts. UK companies are not permitted to file criminal charges against customers who do not repay their loans according to BBCA guidelines. A collection agency may be contacted if the lender had considered all other avenues and it was absolutely necessary.
Operating outside of the OFT guidelines
Lenders of short-term loans should follow OFT guidelines and practice the best practices and collection methods available to them. It is our company’s goal to educate consumers and ensure that they understand the process of payday loans. It corresponds to responsible lending criteria for customer selection.
There have been many posts on consumer forums about payday loan lenders taking money from people who are most in need of it. A payday advance cannot accomplish this; these short-term loans are intended to indebt consumers until payday so they can pay them back on time. Several loan providers have a Responsible Lending policy that stipulates that costs are transparent and that only those customers can repay the loan are approved for the loan. If customers are unable to repay the loan on time, the company offers them the option of paying a small amount back per week, depending on their financial situation.
Additionally, payday loan lenders offer a matching donation program with charities associated with businesses that offer payday advances. Customers are able to donate as much as 50p on their interest payments to Starlight Children’s Foundation, for example.
Accounts are charged with unauthorized charges
Customers are only charged what they owe on payday loans, with providers never wanting to increase rates. Customers are only required to pay back interest payments and charges that are applicable to their account under the ethical practices and responsible lending policies of each company.
Hook setting is taught to employees
Payday loan companies train their employees purely to serve their business and to help customers. Staffs at short-term loan providers are known for their excellent customer service and assistance. Employees from this lender earn more commission when customers are happy.