In recent years, payday loan lending has become a strong alternative to traditional credit options. This is since the giant that is Wonga introduced us all to the ease and accessibility of payday loans back in 2007. Since then, there have been a multitude of lenders enter the industry. For a period of time, the industry wasn’t regulated as strictly as it is today by the Financial Conduct Authority (FCA).
The strict regulations brought in by the FCA led to a number of the less responsible payday loan lenders to leave the industry. That said, it also paved the way for more reputable and ethical payday loan companies to enter the market. The FCA’s regulations focus more on the borrower than the lender, ensuring that the customer is always treated fairly and is well informed of the financial commitment they are contemplating. Some of the regulations set out by the FCA include:
- Initial cost cap of 0.8% per day – For all high-cost short-term credit loans, interest and fees must not exceed 0.8% per day of the amount borrowed.
- Fixed default fees capped at £15 – If borrowers do not repay their loans on time, default charges must not exceed £15. Interest on unpaid balances and default charges must not exceed the initial rate.
- Total cost cap of 100% – Borrowers must never be made to pay back more in fees and interest than the amount borrowed.
When Payday Loan Ranger entered the market, we took a fresh approach to sourcing and providing the best deals for our customers. We focus on their individual situations and cash flow. Our responsible lenders won’t accept anyone if there is an issue of affordability with the credit. Payday Loan Ranger wants to help people with their finances and not further hinder them by accepting a loan they can’t afford.
Traditionally, a payday loan would only have a one month term of finance. You would borrow the money when an emergency happened and repay the money on your next payday. Since the FCA’s interdiction, many of the responsible payday lenders we work with can offer payday credit to be repaid from a month to splitting the payment over 12 months and sometimes even longer.