The reliable and go-to pay-cheque advance and money loan for emergency situations, payday loans help responsible people in dire situations that don’t usually have the disposable income or a savings account to cover unexpected costs. These can include emergency vet visits or other medical bills, fixing cars that suddenly break down, or even fixing a broken water heater or facing other housing crises. They have filled the news, splashing across magazines and newspapers despite the United Kingdom’s recent economic recovery. This is because so many people use them; for example, from 2011 to 2012 about 8.2 million loans were received, and almost two million British citizens regularly rely and depend on the loans to make ends meet every month. While payday loans originated in the United States, they have become a crucial financial factor in the United Kingdom, increasing from a 100 million pound industry to a 2 billion pound industry within the last tumultuous decade. Loans reached 1.7 billion pounds in 2010 with the recession. This is all due to the first payday loan shop that opened in the United Kingdom in 1992: The Money Shop. By 2009, it had 273 locations.
However, despite the industry’s astounding growth and capitalistic success, payday loans have developed a largely negative reputation. This is because for a long period of time, lenders took advantage of those with little money or those who were facing dire circumstances and unfortunate events. Interest rates skyrocketed, collections were violent, and many people sank into an endless dark cycle of debt from which they were never able to escape. Nonetheless, with every dark tale comes a happy ending, and while the negative reputation still clings to many lenders, the reality is that these times are a thing of the past. The American authorities were alerted to the ways in which lending took advantage of unwitting customers as far back as 1935, and interest rates and regulations were put in place. For example, New York and Chicago had capped interest rates of 6% in 1978.
A Responsible, Regulated Industry
As pay-cheque advances have gained traction as a profitable industry and career here as well, the United Kingdom has followed suit. In 2004, the Consumer Credit Regulations were put in place, specifying that all annual percentage rates (APRs) that payday loan lenders charge must be clearly stated in every advertisement. The government works to educate the public about receiving loans responsibly and carefully thinking critically about money decisions, and on January 2, 2015, the Financial Conduct Authority (FCR) decreed that borrowers will never pay back more than twice of what they receive. In addition, default fees received a cap, meaning that there is a limit to the amount you will have to pay for simply using loan services, in addition to interest or any other fees. As a result, lenders are responsible because they are required to be so by regulations and law. What’s more is that those who aren’t financially stable are not eligible to receive the loans – that’s why you have to apply for them and pass a credit check before seriously moving on to receiving money.
Safe, Careful Lenders
Knowing the laws will help you avoid dark establishments. Think critically about the payday lender you choose: do they warn you about the dangers of debt and late repayment, offering financial advice? Is the APR displayed clearly and brightly where you can see it, in the shop or on their website? Are their fees and interest rate transparent? Are they committed to responsible lending? A loan company that does these things is ethical and cares about the people they’re doing business with – in short, they care that you make an informed and responsible decision before coming to them to help. They don’t want you to fall into debt; they want you to succeed! Picking a responsible company like this will save you endless stress and worries in the long run because you know that you’re making the safe, responsible decision. What’s more is that by thinking critically and being careful about your decisions, you know that you won’t have to worry about late repayment because you’re already making responsible choices. After all, your credit history will successfully pass, so you’re already responsible for all other loans. You can trust yourself to budget wisely and responsibly repay your payday advance in the allotted time before you fall into debt.
Boosted Happiness and Less Stress
Payday loan shops and other money lending companies have gained so much traction in the UK, especially in recent years, for a reason. They can improve your quality of life. Imagine living with a broken heater in the middle of winter, your pets and family shivering. You can’t live like that – you need the funds to deal with emergencies. Loans give you the opportunity to do this. They assuage your worries by being careful, responsible loans from ethical companies, no less. It’s been found that these loans have especially helped those suffering in areas that have been hit by natural disasters – honest, responsible people who have fallen on hard times. Pay-cheque advances result in fewer home foreclosures; fewer people who fall prey to drug or alcohol addictions due to the stress, worry and depression of their situation; and birth rates stay the same instead of falling, showing that relationships remain strong. These advantages and successes aren’t possible without careful loans.
The government has put regulations in place that are meant to help you, but in the end, the only person who is in charge or your own happiness, and that of your family’s, is you. It’s up to you to make the right decision to help yourself and your loved ones emerge from your difficult time unscathed. Make the responsible choice to help keep you afloat for a temporary period of time. At the end when you’ve overcome your obstacles and found success, neither your family nor your wallet will regret it.