In the past couple of weeks, yet again, Pay Day Loans have hit the headlines. It looks as if the Government are actually trying to do something about the irresponsible lending and are attempting to enforce new restrictions on how they advertise and a new code of practice.
Last week I appeared on ITV Daybreak, ITV News and BBC Radio Wales to share my story and open peoples eyes that it is possible for anyone, of any age, gender, ethnic to get into debt. Being honest, I was petrified. I was very close to backing out of it but some friends managed to convince me and reminded me that this could help other people.
The Office of Fair Trade have publish their investigations into Pay Day Lenders which is very interesting.
Here’s a quick overview:
• Around a third of loans are repaid late or not repaid at
all.
• 28 per cent of loans are rolled over or refinanced at
least once, providing 50 per cent of lenders’ revenues.
• 19 per cent of revenue comes from the five per cent
of loans which are rolled over or refinanced four or
more times.
• Debt advisers reported that borrowers seeking help
with payday lending debts had on average rolled over
at least four times and had six separate payday loans.
• 30 of the 50 websites we looked at emphasised
speed and simplicity over cost – in some cases
making claims that, if true, would amount to
irresponsible lending.
• 38 of the 50 lenders we inspected failed to comply
with at least one of the complaint handling rules of the
Financial Ombudsman Service.
The Office of Fair Trade have stated that this is the action they are going to take:
• Enforcement action is underway and we have more in the
pipeline.
• We are requiring 50 lenders to take immediate steps (12 weeks) to
address areas of non-compliance and prove to us that they
have addressed the issues raised – we will revoke the licence
of any lender that fails to cooperate.
• We have made clear what we expect of all payday lenders –
this is reiterated in this report. We have written to every single
payday lender setting out our expectations.
• We have launched a consultation on a market investigation
reference to look at wider market issues.
(For more information: http://oft.gov.uk/shared_oft/Credit/oft1481.pdf)
6 months ago I was diagnosed with serve depression, I was constantly worrying about the debt, how I was going to pay it back, the constant phone calls from Pay Day Lenders meant that I couldn’t relax and I refused to answer phone calls from unknown numbers. I felt on edge. I couldn’t see a way out of this circle, I even wrote a couple of Pay Day Lenders begging them to help me. Both Pay Day companies took a while to reply to me, and when I read the e-mails, it didn’t make me feel any better. My bank wouldn’t help me as according to them, they do not deal with Pay Day Loans. I felt as if I was in a black hole stinking deeper and deeper into the depression.
Before writing my first blog, I did ask some friends some questions about debt, little did they know how much debt I was in myself. I have done some research which I will try my best to pass on to you. Here goes…
If you have taken out a Pay Day Loan and you have realized that you can’t afford to pay it back, you are normally given the option to “roll-over” your loan. This is where you can pay the following month plus other fees and interest. Do not roll-over. Don’t even be tempted. This is one of the ways that I ended up paying back so much. It may seen like a quick and easy way, but it’s not in the long run. Instead, get in contact with the Pay Day Lenders and explain to them that you cannot afford to pay back what they are asking. They will try their best to offer you a roll-over. Do not accept.
My suggestion is to set up a repayment plan. This will keep them off your back for a while. Here is a website that can help you contact the debt creditors, http://www.uswitch.com/debt-help/sample-letters-to-creditors/ – It’s very simple and I highly recommend this.
Pay Day Lenders can be very intimidating,. You need to be strong and put your foot down. Pay Day Loan debt is non-priority, they cannot take your house! After you have done this, talk to someone that you trust. You cannot keep the worry to yourself, I did, and it was awful.
Here are some websites that a very useful, give them a look.
http://www.adviceguide.org.uk
http://www.nationaldebtline.co.uk/england_wales/page.php?page=35_options_for_dealing_with_your_debts
http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=41_payday_loans
http://www.stepchange.org/
Your debt won’t go away overnight, but by reading this blog, you’re taking the first step. I’m not going to lie, it won’t be an easy ride, but it will be worth it in the long run.
The Downward Spiral of Pay Day Loans 