Smart borrowing: What you need to know about payday loans

ccPayday loans have something of a murky reputation, and with the tightening of rules by the FCA in April 2014 followed by government regulations put in place in January 2015, it’s clear that some effort has been made to shine a light onto payday lender practices.

This is something that has certainly become a necessity given the industry’s reputation for extortionate charges and the targeting of susceptible consumers.

Responsible lending in practice

It’s clear that this has come not a moment too soon, as in response to the tighter government control, more than third of payday lenders in the UK have stopped operating. As well as this, now that every payday loan provider must apply for a licence to continue trading, it is likely that the number of companies operating will drop even further.

This is even better news for the companies that remain, as they have proven themselves to be committed to responsible lending and having their customers’ best interests at heart. Short term loans provider wizzcash.com has been operating since 2012, and has been steadfast in their commitment to honest and transparency in their dealings.

The company will only lend to applicants who satisfy the following criteria: you must be at least 20 years of age, you must be a resident of the UK and you must take home at least £750 per month in your pay packet after tax. With these rules in place alongside a low APR and a flexible repayment schedule, it’s clear that managing such a loan would not be difficult, so long as it did not become a regular way of seeking funds.

Creating and sustaining a positive image

In general, the payday loan industry has made an effort to overhaul its image, and with clear rules and regulations in place, the new face of the industry may be able to redeem itself. However, personal responsibility is still incredibly important, and it is necessary to understand how payday loans work and what they should be used for before you consider one.

In a sense, redefining payday loans as a means of obtaining easy credit in an open and honest way is a good thing, but payday loans are not supposed to be for daily living. Treating them as such is what caused many people to spiral into debt in the first place. Instead, remember that such short-term loans are designed to be for emergency situations only, as relying on payday loans is not the answer to any underlying budgeting concerns.