Credit lines and payday loans sky rocket in interest rates in 2013 with the average amount of personal debt, according to Credit Action, nearing £6,000. The government has been called to action to help level the playing field concerning the ability of the borrower to pay, while allowing lenders to make reasonable money.
Lenders are accused of abusing their right to make a buck off of the average Joe, for billions of pounds in revenue. The problem is the way in which loans are distributed to borrowers. Credit checks are not given, as a gimmick to hook, line, and sink, with no knowledge if the person can actually repay the loan. Promises are given out like confetti at a Gatsby party in West Egg, while customers jump at the first sign of a fast fix. Short-term solution for long-term catastrophe for borrowers when the proper check points are not properly executed, can damage the market severely.
The British government has recognized the fact that nearly 57% percent of lenders clients enter into contracts, knowing full well they cannot repay in time. As the Office of Fair Trading states, “Weaknesses in the financial capability of consumers,” are enticing and preyed upon by big wig lenders. If a cap on interest rates and the amount in which a client can borrow is capped by the British government, are there other ways of working around the rules for lenders? The government alluded to the potential rise in overdraft fees and other late charges that could be made use of, so there’s the rub. The abuse of same day payday loans interest rates by lenders may still plague the market.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk