For the payday loan industry, 2015 was the year of regulation and compliance. The number of people taking out payday loans in the UK had increased considerably and, as a result, more regulations were put into place for providers of short term loans.
Though payday loan companies still aren’t restricted to a certain level of interest, for example, there are strict rules about how a typical APR needs to be advertised. The Financial Conduct Authority was created in 2014, and through 2015 has been working to keep payday loan providers in check, particularly regarding research into ‘excessive’ default fees. The Financial Conduct Authority capped default fees at £15, in early 2015.
What can we expect from 2016?
2016 is the year for ‘considered borrowing’, with people becoming less likely to jump into a loan agreement without considering all of the consequences.
The news reports of 2015 have led people to be rightfully cautious. There is an inherent ‘fear’ of payday loan companies, which is something of a double-edged sword. It’s important to know what you’re getting into with any financial agreement, and the increased caution is good news for this reason, but media scaremongering should not deter those that do their research properly. Used in a sensible manner, payday loans are an important bridge over the gap between bill day and payday.
What help is available for payday loan applicants in 2016?
Payday loan comparison sites are 2016’s most valuable tools, enabling customers to review their options and to find more information about what a payday loan involves.
More and more people are turning to loan comparison websites to compare rates and features, seeing various loan offerings side by side.
Not only will a good payday loan comparison website show you a wide range of potential options, it could also show you other offerings outside of the payday loan industry – longer term loans that should be clearly marked, and that may allow you to pay your debt ahead of schedule with no early repayment fees.
Recent studies by Santander found that 10% of people in the UK have taken out a payday loan to cover their bills. With millions of people using payday loans to manage their personal cash flow, and with borrowers more aware about what they should look for in a loan company, it should come as no surprise that comparison sites are set to be the big thing in 2016.