Pay day loans, and other short-term financing. What exactly are pay day loans?

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Pay day loans are a type of borrowing referred to as “high-cost, short-term credit”. You borrow between ВЈ50 and ВЈ1000 and spend the loan back with interest, in a single re payment on or soon after the next payday. This type of borrowing is often higher priced than various other forms of credit.

There are more forms of short-term financing, including:

  • instalment loans – repayments are spread regular or month-to-month over several repayments, typically between three and a year
  • ‘running credit’ or ‘flex credit’ – the way in which this works is similar to a bank overdraft, borrowers and offered a ‘limit’ they can set up to as a if they have to, provided they spend at the least the interest off every month. As the credit contract has not yet fixed end date, this kind of credit is high priced and meant for short-term just use.

Kinds of complaints we come across

We have complaints from customers whom inform us that loan providers:

  • lent them cash without checking that they could manage it, and from now on they will have plenty of additional interest and costs that they can not spend
  • had been unreasonable or unjust whenever their finances changed
  • just weren’t clear about whenever re payments had been due

That which we have a look at

As with any loan providers, short-term loan providers must make sure that they’re offering credit in a accountable method.

They should finish reasonable checks to be sure you are able to afford to settle that loan before agreeing to it. There’s a selection of information that lenders might use as an element of their checks, together with your earnings, regular outgoings, borrowing and payment history with that lender and their wider utilization of credit (for instance reviewing a credit file).

We’d expect to observe that a loan provider gathered additional information – and much more proof the figures used – where:

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