Payday Lenders Unfairly Portrayed as Loan Sharks

Many payday loan companies are being unfairly painted as criminal organisations or even loan sharks by areas of the British media. The public are being misled about these services and it is leading to confusion about the difference between legal and illegal lending in the run up to a very important time of the year for such companies. Borrowing in today’s climate No reputable payday lender would ever insinuate that borrowing money is a prudent financial choice but contingency plans are needed – especially in today’s economic climate. The recession has made things tougher for all consumers, whether it be people at any end of the pay scale. When approached with the right attitude, short term finance can help individuals to get out of some tight situations. The ‘lendee’ must be vigilant The criticism of the payday lending sector has emerged due to some companies apparently giving out payday loans that are unaffordable due to rollovers and annual interest rates running into several thousands of per cent. This is an issue that needs to be closely monitored, but with customers receiving legal terms and conditions and contracts, a certain amount of onus needs to be on the ‘lendee’ to remain vigilant. Payday Loan Lenders versus Legal Loan Sharks The alarming thing for payday loan lenders is the use of the term ‘legal loan sharks’ by certain outlets, which is portraying them in an overly negative light. Payday loans are not ideal and as conveyed on any site of this nature worth its salt, they should only be considered as a last option – but firms that offer this solution in a transparent manner seem to be the subject of a witch hunt. What the experts say Russell Hamblin-Boone, chief executive at Consumer Finance Association (CFA), has been voicing his concerns at recent developments. Understanding the stigma involved with payday loans, he has been doing all he can to highlight the difference between them and violent criminals such as loan sharks. As he points out, the latter charge interest rates as high as eleven million and will also threaten injury or worse if the loan isn’t paid back – certainly something that payday lenders would never do. Improved Transparency In reaction to this unfair labelling, 90% of the payday loan industry has signed up to more transparent terms and conditions – approved by the CFA. The Office of Fair Trading is also running a review into various payday loan companies and will make its findings available at the end of the year.