Insurance
Money
Providers
Blog
News
Newsletter
News Archive
Get the latest deals, news and advice in your inbox with our no-spam guarantee!
News in Loans
Subscribe to our e-mail newsletter to receive the latest news headlines and special offers in your inbox. You may also be interested in our blog commentary updated on a daily basis. For more info on our editorial team click here.
Consumers falling foul of payday loans
More and more Brits are falling into debt by taking out payday loans to pay for everyday items such as food, petrol and household bills.
Research by consumer group Which? has found that 60 per cent of people that took out these high interest loans were using the money for these amenities plunging them further into debt.
The company found that 45 per cent of people admitted to incurring greater financial problems after taking out the loans. An investigation by Which? of 34 payday loan companies found that one firm was charging consumers £150 for being ten days late with a repayment.
In April, Stella Creasey, MP for Walthamstow, called on the government to implement better regulation checks on these companies to stop more people being plunged into unmanageable debt.
Richard Lloyd, Which? executive director, said: "People are getting caught up in a debt trap, whacked with high penalty charges, or encouraged to roll over payments and take out more loans at inflated rates." More »
By Sarah Engle, Loans - Fri 18 May 2012
Payday lenders defend loan arrangements
Payday loan companies have defended their industry claiming that many politicians have "misunderstood" the lending system.
The high interest loans have come under increased scrutiny over recent months as many consumers are tending to favour borrowing money at an increased level of APR as opposed to using credit cards.
Members of the Business, Innovation and Skills Committee criticised the companies in March and called upon the government to introduce more stringent regulations around these firms.
However, the Consumer Finance Association (CFA) has claimed that the lenders can actually provide good value for money. It highlighted a YouGov survey where nine out of ten consumers said these companies treated them with respect.
John Lamidey, chief executive of the CFA, said: "Payday loans can be misunderstood by politicians concerned for the welfare of their constituents in tough economic times. This research clearly shows that the people who actually use payday loans are extremely satisfied." More »
By Sarah Engle, Loans - Thu 3 May 2012
MP calls for payday loans to be better regulated
A MP is pushing the government to make amendments to the Financial Bill in order to include improved laws around payday loan companies.
Stella Creasey, MP for Walthamstow, wants regulators to be given more power over how much these "loan sharks" are allowed to charge in credit and she has already received cross party backing for the new initiative.
Some payday lenders can charge over 1,700 per cent APR when a person takes out a loan while trying to get by and be able to afford their daily cost of living as well as paying for utility bills. Ultimately, it lands consumers in more debt than before and some people struggle to pay it back.
Within the Bill will be the creation of the Financial Conduct Authority (FCA) which takes away the role of dealing with credit from the Office of Fair Trading and Ms Creasey wants to ensure that there is a maximum level of which payday companies can charge.
The amendment reads: "The FCA may make rules or apply a sanction to authorised persons who offer credit on terms the FCA judge to cause consumer detriment." More »
By Sarah Engle, Loans - Mon 23 Apr 2012
Consumers paying back loans at rapid rate
Borrowing has remained weak in the past year as consumers pay back loans, credit cards and overdrafts at a rapid pace.
A report by the British Bankers' Association (BBA) revealed that there was a £305 million net repayment in February, making it the highest reimbursement month since January 2011.
Many UK borrowers have begun to favour taking out high interest payday loans as opposed to credit cards as the money can be gained almost instantaneously, but the company's have been severely criticised for encouraging debt-ridden people to incur more arrears.
The BBA's report revealed that whilst credit card spending hit £7 billion, consumers were paying back £7.3 billion as they tried to clear any outstanding payments they owed.
David Dooks, BBA statistics director, said: "Businesses and households continue to be cautious about their finances in the face of difficult economic times and this shows up in a reluctance to take on new credit." More »
By Sarah Engle, Loans - Mon 26 Mar 2012
Young entrepreneurs handed loan bonus
Young entrepreneurs starting their own small business are to be given student-style loans as part of a new government initiative.
Chancellor George Osborne announced in the 2012 Budget yesterday (March 21st) that a £10 million fund, designed to help enterprising young people, had been approved and will be put into force later this year.
Business tycoon Sir Richard Branson, who set up the Virgin Group in 1970 when he was only 20 years old, has been lobbying for the government to introduce the fund and welcomed the chancellor's decision.
Students are currently allowed to borrow money when they go to university and only begin paying it back once their earnings exceed £21,000 and Sir Richard, whose business has just entered to banking, believes this should be extended young business owners.
He said: "The country is full of gifted and enterprising people so this pilot, which crucially has business mentoring and support at its heart, will help prevent a lost generation of talent." More »
By Sarah Engle, Loans - Thu 22 Mar 2012
Small businesses to be given govt loan
The government has launched a new scheme in a bid to ease the pressure on small businesses across the UK.
Chancellor George Osborne has unveiled the National Loan Guarantee Scheme (NLGS) which allows companies to benefit from low-cost lending that the government's services already enjoy.
In a statement, Mr Osborne said: "It's only because we've earned credibility with our deficit reduction plan that we have low interest rates, and it's only because of this scheme that we can pass the benefits of those low rates onto businesses."
However, the plan has already encountered opposition as it struggled to get major banks on side. HSBC, Britain's largest financial institution, has already announced that it would be snubbing the deal as officials believe that the plan is not "financially viable".
Other business groups have argued the NLGS does not provide any leniency in the way banks address their lending policy. However, Mr Osborne believes it is the best to boost the country's industry. More »
By Sarah Engle, Loans - Wed 21 Mar 2012
Payday loan trouble doubles since 2010
The amount of people getting into financial difficulties after taking out payday loans has more than doubled since 2010.
Figures from the Consumer Credit Counselling Service (CCCS) have revealed that it has lead a number of borrowers contacting debt councils for support on how to manage their outgoings.
A report by the organisation found that since 2010 the number of people ringing up for advice grew from 7,841 to 17,414.
A group of MPs recently criticised these payday loan companies for encouraging people to take on more debt with repayment rates that are totally unsustainable and they called on the government to enforce stricter regulation.
These firms can charge excess rates up to 1400 per cent and many believe that this is irresponsible on the lender's behalf.
The CCCS told the Daily Telegraph: "Payday lending is a new industry meeting some client need but worrying accounts of malpractice suggest that the sector needs to be effectively scrutinized." More »
By Sarah Engle, Loans - Wed 14 Mar 2012
NUS slams govt decision to freeze student loans
The National Union of Students (NUS) has attacked the government over the decision to freeze the level of tuition fees.
Whilst the rate will remain at £9,000 for any universities choosing to charge the highest level, the NUS believes that many students are struggling to afford the cost of living as loans will not rise any higher.
There was much opposition to the government's decision to raise the tuition fees and this latest announcement has not alleviated the hostility from students heading to higher education centres.
Despite the University and College Union (UCU) welcoming the timing of the decision as it gave more time universities to prepare for the changes, NUS leader Liam Burns slammed the government ruling.
He said: "Freezing tuition fees at the current rates when they've just been tripled is nothing to get excited about. We know that there's thousands of students out there that don't have enough money while they study." More »
By Sarah Engle, Loans - Fri 9 Mar 2012
Payday loan companies further criticised by MPs
A group of MPs has criticised payday loan companies and has called on the government to enforce better regulation against some rogue firms.
There has been a growing number of these high-interest lenders, which have been known to encourage people struggling with debt to borrow money which has payback APR rates up to 1400 per cent.
One lender, Wonga, was condemned in 2011 by the National Union of Students for tempting young people in university to pay off their debts by using these schemes.
Now the Business, Innovation and Skills Committee has called for government to become stricter in licensing these firms following its report into the country's debt management.
Adrian Bailey MP, chair of the committee, said: "Payday loans, by their very nature, appeal to those in serious financial need, some of whom will have low levels of financial literacy. Consumers must have a clear idea of the cost of this form of credit." More »
By Sarah Engle, Loans - Wed 7 Mar 2012
Debts causing sleepless nights for Brits
Rising debts are causing sleepless nights for Brits, according to new research by the Co-operative Banking Group.
The study revealed that 70 per cent of UK homeowners have problems with debts and a further 29 per cent of people said that not being able confront their rising fees was causing sleepless nights and low self esteem.
With the cost of living on the rise and wages either cut or stagnating many people in Britain are struggling to maintain the balance between paying the bills and living a reasonably comfortable life.
Bosses at the Co-operative believe that a third of Brits suffer from a "DRIP Syndrome" by denying, rationalising, ignoring and then postponing deals with debts, with one in eight people turning to gambling to dig themselves out of the red.
Robin Taylor, head of banking at the organisation, said: "It's no surprise that people are feeling the pinch at the moment and that debts are mounting up, but what is surprising is that many people are choosing to ignore their debt." More »
By Sarah Engle, Loans - Wed 29 Feb 2012
OFT to investigate payday loan firms
Payday loan firms are set to be scrutinised after the Office of Fair Trading (OFT) launched an investigation into the schemes.
It comes amid concerns that companies are taking advantage of people in financial difficulty and as a result plunges them further into debt. Bosses at the OFT will look into a number of factors around the way payday loan firms operate.
These lenders are renowned for being able to provide instant cash for borrowers, which is paid back on the person's payday. However, the firms put on huge interest fees, usually around 1,300 per cent, which some struggle to repay.
Officials at the OFT will review issues such as giving out loans before checking whether the borrower has the capability to pay it back and "rolling over" lending so that debts can easily amass.
David Fisher, the organisation's director of consumer credit, said: "The payday sector has grown considerably since the OFT's high cost credit review in 2010. This, combined with the current tough economic conditions makes it the right time for us to review the industry and improve protection for consumers." More »
By Sarah Engle, Loans - Mon 27 Feb 2012
Student loan early repayment penalties abolished
Plans to impose a penalty on people wanting to pay back their student loans early have been abolished by the government.
It had originally been proposed to punish those wanting to clear their debts within the 30-year period after leaving university. Ministers believed this would prevent the rich quickly wiping out all their outstanding student loan but it had been criticised as many middle-earners also wanted to be rid of the debt before the existing timeframe.
However, the plans have been damned by the University and College Union (UCU) as it is perceived as another method to help the wealthiest within the society. Since the introduction of higher tuition fees the rate of student loans has had to be adjusted to meet the required payments.
The UCU believes that the government should be more focused on helping the poorer students afford to go to university rather than assisting the rich.
Sally Hunt, the union's general secretary, said: "While no one would condemn any family that sought to pay off their children's debt as fast as possible, today's move simply exposes yet again what an inconsistent mess the higher education reforms are." More »
By Sarah Engle, Loans - Mon 20 Feb 2012
Payday loans plunging families into debt
High interest payday loans are on the rise as families struggle to keep up with the amount of debts they have amassed.
Whilst credit card usage is declining, new research by PricewaterhouseCoopers (PwC) found that many UK households still has an average debt of £7,900. The company believes that credit cards are entering a "mid-life crisis" as more people are choosing payday loans as a faster alternative to access necessary funds.
Recent research by Aviva found that 62 per cent of homeowners were worrying about the increased cost of living, with 42 per cent of families unable to save anything over the past 12 months.
Bosses at the PwC believe that people need to get more money quicker and that credit cards are no longer a viable option.
Simon Westcott, director of company's financial services practice, said: "Although the UK government's austerity drive appears to be hitting home, with households paying off an average of £355 worth of their debt in 2011, three years of austerity by UK consumers has only made a small dent in the total levels of borrowing." More »
By Sarah Engle, Loans - Thu 9 Feb 2012
Need for debt advice 'to rise' in the next 12 months
More and more people will be seeking debt advice over the coming 12 months, according to the Money Advice Trust. More »
By Sarah Engle, Loans - Tue 7 Feb 2012
Welsh Assembly criticises payday loans
Payday loans companies have been criticised by members of the Welsh Assembly for "sucking money" from the poor across the country.
Firms offering high-interest bonds have come under scrutiny in recent weeks due to the "irresponsibility" of the style of lending. Wonga, a major short-term lender, has been criticised recently after it encouraged students looking to reduce the amount debt they had over the course of their studies to use the scheme.
Now the Welsh Assembly has attacked the companies for targeting poor and vulnerable communities to take out loans they will struggle to pay back.
Simon Thomas, Plaid Cymru assembly minister, has called for there to be a cap on the high-interest loan which can be well over 1,000 per cent APR.
He said in a debate at the Senedd: "Adverts concentrate on the quickness and simplicity of the lending, the amount paid back is talked about in terms of £20 and £30. It's hard for a consumer to make a choice based on the real interest rates." More »
By Sarah Engle, Loans - Thu 26 Jan 2012
Family debt increases in the past year
Families in the UK are struggling to keep on top of their finances as the level of household debt continued to rise in 2011.
Research by Aviva found that more parents were taking out loans in a bid to reduce the level of debt they had amassed. Whilst the typical monthly income rate rose by seven per cent to £2,066 (up from £1,937 in January 2011) many more people are failing to save enough money.
The study found that 62 per cent of UK families were worried about the rising cost of living with 42 per cent of households not saving anything during the past 12 months. Many are highlighting the rising rate of inflation which has impacted on consumer confidence.
Louise Colley, head of protection sales and marketing at Aviva, said: "Families in the UK are still very concerned by the rising cost of living and levels of unemployment."
Recent research by Gocompare.com found that more Brits were turning to credit cards as a way of combating rising debts with 26 per cent of people expected to owe money in the coming year. More »
By Sarah Engle, Loans - Wed 25 Jan 2012
Payday loan demand trebles over Christmas period
The demand for payday loans trebled over the Christmas period last year compared to 2010, according to a money lender.
Loan company Speedeloans has said that its figures show three times more people turned to payday credit to get through the costly festive period. Despite the rising amount of loans being handed out the firm revealed that its customers were had 30 per cent less debt than in 2010.
At the beginning of January a survey by YouGov on behalf of Shelter Scotland revealed that 936,000 people within the UK were turning to payday loans in a bid to save over the previous 12 months.
James Falla, personal debt expert at beatmydebt.com, wrote for the website: "A combination of factors has lead to a higher take up of payday loans. One of the primary reasons is the increased advertising particularly TV marketing campaigns carried out by payday lenders in the run up to Christmas." More »
By Sarah Engle, Loans - Fri 20 Jan 2012
Wonga criticised over student loans
Short-term lender Wonga has been heavily criticised after encouraging students to use high-interest loans.
The company came under fire from the National Union of Students (NUS) after Wonga said that students could benefit from using the service.
On the firm's website under the headline "student loans" it claimed that there was a "totally new way of borrowing money to see you through until your next cheque and its called Wonga".
NUS officials branded the company as "highly irresponsible" for carrying what it called "predatory marketing". Wonga has subsequently removed the article under increased pressure from the union.
A spokesman for the company said: "We do not actively target students in any way and our marketing is all mainstream, such as on TV and radio. The two web pages in question are examples of the many search engine optimisation pages on our site, which is essentially content covering all aspects of credit."
Wonga is currently the shirt sponsor of Blackpool FC and has been since the club's promotion to the Premiership in 2010. More »
By Sarah Engle, Loans - Thu 12 Jan 2012
More Brits turning to payday loans
More people in the UK are turning to payday loans to pay off mortgages and rent, according to new research by YouGov.
The survey for Shelter Scotland found that two per cent of people had resorted to the loan meaning that 936,000 would use "quick fix" payments. Campaigners have warned that the latest trend is "extremely worrying".
Prior to Christmas it was reported that many were turning to the high interest loans to pay for the costly festive period but the new figures have revealed that more are using them to pay for everyday utilities.
Gordon McRae, a spokesman for the charity, estimated that one million people in the UK had taken out these types of loans.
John Lamidey, chief executive of the Consumer Finance Association, added that using short-term loans to pay for mortgages was "simply impossible".
He said: "They are loans for a short period of time, typically a month. If somebody applies for a loan and it was discovered they are in arrears with a mortgage we would not lend and we would steer them to the debt advice agencies." More »
By Sarah Engle, Loans - Wed 4 Jan 2012
