There are several companies, known as payday lenders, who specialise exclusively in these arrangements.
Whilst popular, payday loans can cause a lot of financial trouble later down the line. As such, in recent years, the Financial Conduct Authority (FCA) has stepped in to regulate these lenders.
How can payday loans cause debt?
A lot of people turn to payday loans in their hour of need because they propose a fast, easy source of funding. However, the vast majority of payday loans come with extremely high interest rates, meaning people can end up paying back far more than they initially borrowed.
The longer you take to return the money, the higher the charges can be. In some instances, there may also be hidden fees involved – it’s not uncommon for a small loan to end up costing you four or five times the original amount borrowed.
New FCA regulations stem from concerns about payday lenders’ previous conduct and the amount of interest being charged on loans, as well as concerns that loans were being made to people who simply could not afford to repay them. While the FCA have clamped down on a lot of poor practices, payday loans remain an expensive source of borrowing and great care should be taken before accepting a loan from these companies.
Get essential information from Bennett Jones
If you’re in debt due to payday loans, it’s important to take action as quickly as possible to prevent further financial problems from arising.
Speak to the Bennett Jones team today and we’ll give you valuable information to help manage your debt and make a full financial recovery.