The Recent Rise in Payday Loan Complaints
Unless you have lived outside the UK, and even then you will have heard of these complaints, or under a rock, everyone knows about PPI mis-selling and PPI complaints to the FOS/Financial Ombudsman Service.
PPI claims soared last year when a deadline was announced for when people could claim, which is August of this year.
Banks set aside billions for these claims, and for the most part, the claims wee processed and paid out. However, with the sheer volume of those filing for refunds, complaints were bound to occur. And occur they did, the FOS has stated that PPI complaints are the highest number of complaints they have received.
However, PPI refunds are no more the “soup or complaint du jour”, complaints against payday loan lenders are now the complaint of the day.
Payday Loans in the News
Again, unless you have been hiding in a cave, payday loans and their lenders have been all over the news in recent years. And the FOS have been seeing a rise over the years in complaints against payday lenders.
The largest payday loan company in the UK, Wonga, went out of business last year, in part due to the fine assessed against it by the FCA/Financial Conduct Authority for bad business practices, and also due to complaints and refunds and redress to customers.
And these complaints against payday lenders do not seem to be subsiding, but according to the FOS are on the rise.
For the 2018/2019 period, 40,000 complaints against payday lenders were received, which is up by 17,000 over the previous period.
In total the FOS have received 388,000 complaints against payday loans.
PPI complaints are no longer King.
Payday loans are now in reign.
Payday Loans and Alternatives
Payday loans are short-term, high interest rate loans, for borrowers who need a loan quickly, and who may have bad credit.
Payday loans are based on the following:
* Having a job and wages
* Having a bank account
Since payday loans are short-term loans, usually 30 days or less, the APR or annual percentage rate appears to be very high 1500%, 2000%, as the interest rate is expressed in an annual amount.
Payday loans can also cause someone to fall into a spiral of debt, borrowing to pay off one loan and rolling loans over.
Payday loans do have their place in the lending forum, but borrowers need to be aware of the pitfalls and options.
One option is guarantor loans.
Guarantor loans can be quickly approved just like a payday loan, and are based on affordability and the fact the borrower has a guarantor, someone to guarantee the loan.
Bad credit or a low credit score is not a problem or issue. In addition, guarantor loans can be for higher amounts than a payday loan, and repaid over a longer period of time to make the monthly payments more affordable.
So while a rise in payday loan complaints, there are alternatives to taking out a payday loan.