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by Ronnie Das & Jane Brown

Imagine that with just a simple Google search and a couple of clicks on your smartphone, you could borrow 5000 EUR for anything you want. A luxury holiday or a house renovation, anyone? Very few Hillsboro payday loan cash advance questions, hardly any background checks. This is not a simulated scenario, but the current reality of the High-Cost Short-Term Loan industry, which is continuously evolving, always finding new ways to entice people into a spiral of debt.

During the recession in 2008, High-Cost Short-Term Credit (HCSTC) – known as ‘Payday Loans’ in the UK – was booming, popular mostly amongst consumers with limited financial resources or poor credit history. By 2012, four figure interest rates were being charged, along with additional fees. 1 Lenders have been predatory 2 , encouraging an unmanageable spiral of debt amongst vulnerable consumers. 3, 4 An exponential growth of the market, up to 50% per year, shows how extremely popular this type of credit used to be – until the introduction of government regulations.

New legislation, implemented in the UK in 2015, changed the payday loan market considerably, leading to a massive decline in demand for problematic lending. 5, 6 Responding to a wider call, the Financial Conduct Authority took decisive action by introducing strict financial regulations and interest caps against payday lending system. A full list of regulatory changes can be found here. 7

Understanding the new generation of payday borrowing

In , Google promised to ban opportunistic payday loan advertisement. 8 Since then, some industry market leaders – think of QuickQuid, Wonga and Wageday Advance – had to shut shop. There just wasn’t enough demand anymore. 9, 10 The number of customer complaints that The Financial Ombudsman recorded had more than tripled by the end of 2019 11 , suggesting these are still deeply flawed finance products continuing to affect people’s lives in a negative manner. Devamını Oku