Facts about Payday Loans

Question. What are payday loans? Answer. Smaller amounts of cash such as �100 can be borrowed at a high rate of interest on the agreement that it will be repaid when the borrower receives their next wages.

Question. Who should avoid payday loan? Answer. Consumer advocates and lawmakers are urging low-income consumers to avoid payday loans.

Question. What is purpose of payday loan? Answer. These loans are meant to bridge the gap between running out of cash and getting your salary.

Question. Is any guarantor or collateral required for payday loans? Answer. Payday loans are unsecured loans which means that the borrower does not need to put up any collateral such as a car or a house to get the loan.

Repayment of Payday Loans

Question. What is loan repayment procedure? Answer. Loan amount can be repaid via direct debit from your bank account.

Question. What is continuous payment authority (CPA)? Answer. When you take out a payday loan, it will generally be paid back via a continuous payment authority (CPA). This essentially allows the lender to take the money directly from your bank account. And if there isn�t enough money in the account, there will be charges added for late payment. These charges could quickly become very significant. But the new rules mean a lender cannot use the CPA more than twice if they have not been able to get the money from your account, nor should they try to take a part payment.

Caps on Payday Loan Interest By FCA

Question. What are interests caps put by FCA? Answer. There are now interest caps in place too, of 0.8% per day of the amount borrowed. So for a typical loan taken out over 30 days and repaid on time, you should not be charged more than �24 per �100 borrowed. Default charges are capped at �15 too.

Risk involved in non payment of Payday Loans in time

Question. What if I am unable to repay loan in scheduled time lines? Answer. If you are having issues paying the loan back, you need to speak to your lender as soon as possible. You can then work out a way to pay the loan back. This may mean the lender freezes the interest on your loan or suspends further charges, or even suspends recovering the debt itself for a reasonable period if you are working out a repayment plan with a debt adviser. The lender is required by law to work with you to find a solution to your debt.

Question.What are penalty and surcharges of non repayment? Answer. FCA has put a limit on penalty as 15 pounds but lender may charge other charges in name of collection charges, country court judgement etc so one should lend amount which he can easily repay in next payday.

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Representative APR 1212%

Representative Example: Borrow �200 for 35 days. One total repayment of �256.00. Interest rate 292% (variable). Interest payable: �56.00. Representative APR 1212%

Consumer Advisory: As text loans are short term unsecured loans and bears high interest rate so you should consider carefully that these cash arrangement is suitable for you. Loan approval is subject to your suitability and affordability for applied loan amount and lenders may perform a credit check on you.

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