Here at www.scottishtrustdeed.info we have helped many clients over the years with resolving their financial situation when they have struggled to repay their debts. A very common thing that we found was on average one in three had at least payday loan in with their debts and more often than not these type of debts are what made their financial situation go out of control.
Many have described payday loan companies as modern day loan sharks as they would make it seem in their adverts that they were out there to help when a little short at the end of the month then eventually the loan would turn into a large overdraft after a month or two & leaving that individual banking on taking a new loan each month which would rack up huge profit for the payday loan companies.
However on the other side of the argument from the payday loan companies, if it was a one off loan until the end of the month it could work out that their could be less interest to pay back as opposed to the average high street bank overdraft. From past experience with clients in debt this was never really the case as once an individual had borrowed their initial loan the payday loan companies were not doing proper disposable income checks & often that individual would be back straight after payday and they had paid back the initial loan to borrow a higher loan this time to cover the amount lost in the last loan and that would generally carry on month to month until the debtor was then borrowing almost their full wage just to get by and eventually the debt would be too much to pay back each month and the companies were automatically removing whatever funds they could from the debtors bank card.
After seeing the effects of these loans everyone started to question when will this end? Who will put a stop to this?
These loans were introduced in 2006 when large American loan companies were ordered to cut down on doing the same thing back in America, so they seen an opportunity in the British market and managed to loan a total of £330m as released from the Citizens Advice.
Who was the main player? In 2007 Wonga launched and became the strongest brand within the payday loan market with massive marketing campaigns across all sectors including internet, television, newspapers, radio and were even able to sponsor football clubs to get the brand out there.
In 2009 the total value of payday loans that had been loaned out since 2006 reached a massive £1.2 billion.
In 2010 Labour MP Stella Creasy had labelled payday loan companies “legal loan sharks” and showed her anger towards this type of lending by stating, “Companies like Wonga are taking advantage of a perfect storm in consumer credit, where more and more people are struggling as the cost of living soars and mainstream banks withdraw from the market” .
By 2012 payday loan companies had managed to lend out over £.7 billion over ten times what was lent in 2006 and in 2013 alone over £2.5 billion was loaned out to struggling individuals. In the same year Wonga decided to raise the interest they charged on their loans from 4214% to 5853% APR and shortly after they had announced in 2012 they had more than one million customers taking loans. By this point they were well and truly in the public eye and there were many people challenging by this point.
However the success was short lived for Wonga as in June 2014 they were ordered to pay £2.6 million to the City regulator for sending threatening letters to debtors from fake law firms in an attempt to recoup their funds, shortly after they started removing their well known television adverts. Later that year things started to crumble for payday loan companies such as Wonga was forced to write off £220 million of customer loans, The Money Shop were the same with over £700,000 written off & Cash Genie coming across the same issues.
In January 2015 the big profits for the payday loan companies started to disappear as a price cap was introduced to make sure no one could charge any more than a daily interest rate of 0.8% of the amount borrowed and when debtors defaulted they could not be charged any more than £15. So what did this mean? If someone borrowed a payday loan they could not be charged any more than £24 for borrowing £100 over 30 days as long as they paid that back on time, After that payday loan companies had to change their audiences and marketing tactics leading to big name brands in the industry either writing off debts or paying fines such as Dollar Financial UK, Quickquid and pounds to pocket.
In 2016 Cash Genie went into liquidation and there were massive losses for big brands like Wonga and CFO Lending also had to write off loans. A big change to the market happened also this year with Google banning the ads of high interest loan companies.
Now there are still short term loan companies out there but just not as aggressive and taking more precautions when lending but the massive wave of lending has certainly calmed down to say the least. If you have ever had issues with the following loan companies get in touch and see if you can write off un-affordable debt;
Wonga / The Money Shop / Cash Genie / Payday UK / Payday Express / CFO Lending / Dollar Financial UK / safetynetcredit.com / vivus.co.uk / Pounds to Pocket / peachy.co.uk / 247moneybox / Piggybank / smart-pig.com / 118118 Money / Drafty / moneyboat.co.uk / Credit Start / Loans 2 Go / Oakham / H & T Finance / Lending Stream / Quickquid / Wage Day Advance / Wage Me / My Jar / My Lender / Sunny / Satsuma Loans / Pixie Loans / Quidie