The payday loan is the types of loan that are very fast growing in the UK. It proves to be a very flourishing industry and therefore the number of people that are interested in taking these types of loan. The number of people has increased by 4 times the previous number in the recent years. Around 300 pounds is the average size of the payday loans that are taken in the country of UK. although there is no strict law or any form of restrictions that is put on the banks on the rates of interest that they can charge yet there are regulating laws that require a statement of the Annual Percentage Rate(APR).
In the year of 2009 the industry of the payday loan generated around 20% of the lending in the UK. The largest lender, providing around one-fourth of the payday loans in all of UK is the Dollar Financial Group. The payday loans can also be obtained from the internet as well.
Overview of payday loans
Though over the last five years the phenomenon of payday loans have grown very fast in the UK for the last few years, but the origin of the payday loans lies in the Americas. The most use of payday loans is by the students opting for higher studies. These loans can also act as credit card loans. These loans may also serve for other purposes of buying at this site. The providers of the loan usually imply a fee commonly known as a flat fee.
There is also an important thing that needs to be kept in mind while taking the payday loan. It is that if the loan is rolled over for a span as long as six months then it may cost the same amount as the original loan amount. This phenomenon occurs due to no strict regulations that guard the laws of rolling over of the amount of the loan here in UK. Also there exist no restrictions upon the rates of interest that the loan lending companies can charge.
Regulations and acts
In order to offer credit to the consumers the lending company of the loan must possess a license that is issued from the Office of Fair Trading (OFT). It was made mandatory under the Consumer Credit Act in the year of 1974. Under the revised version of the act it is clearly stated the OFT is required to make a thorough evaluation of whether the lender has the appropriate ability to be provided by a license to lend loans.
The advertisements regarding the payday loans are controlled under the Consumer Credit (Advertisements) Regulations act of 2004. Therefore though there is the absence of the interest rate regulations yet the lender is require to mention the rate of interest applied to the loans to ease customer decision.
Criticism of payday loans in UK
A complaint was made by Credit Action to the OFT office in UK objecting the phenomenon of placing advertisements in the social networking media like face book about their loans offered and this was a breach according to the regulations act. Also the APR rates were not clearly mentioned here which is unlawful according to the standards of advertising in UK.
Related posts:
- Payday Loans UK: Fast and Reliable Loans
- Payday Loans
- Frequently Asked Questions Regarding Payday Loans
- Important of payday loans
- IMPORTANCE OF PAYDAY LOANS
- Is a Payday Loan the Best Option Available?
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