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Are Payday Loans For The Unemployed?

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It has been revealed that a substantial amount of unemployed people are being handed payday loans and subsequently struggling to pay them back.

At the moment, there are no rules against lenders providing payday loans to the unemployed – despite the significant chance that a lack of income will hinder their chances of paying back their credit in time.

The Consumer Credit Counselling Service (CCCS) has claimed that lenders need to give the unemployed more protection against debt by refusing to offer payday loans to those in unsuitable circumstances.

Payday loans are becoming increasingly popular in the UK as people look for a quick-fix for their immediate cash flow problems.

However, lenders need to ensure that affordability checks – or credit checks – are carried out so that basic information like current employment and credit history are taken into consideration during the loan approval process.

It is here where responsible lenders – like Ferratum – stand out because, as explained in the FAQ section, Ferratum only lend to people who are employed and in a stable working environment. This initiative is designed to benefit both the lender and the consumer.

People who are unemployed are much more likely to be at risk of further debt problems if they have no income and Ferratum recognises this and wouldn’t want to put individuals in unnecessarily weak financial positions.

However, this kind of protection isn’t available everywhere and the CCCS has reported that one in 20 of those who had complained about difficulties in paying back their short term loans were unemployed. In raw numbers, the CCCS reveals that there has been an increase from 283 indebted unemployed clients to 1,243 in 2011 with an average owed credit of £918.

Delroy Corinaldi of the CCCS explained: “Unemployment is the biggest single driver of debt problems in the UK and people who have lost their job after taking out extremely expensive payday loans are finding it particularly difficult to cope.

“Payday lenders must recognise this growing problem. Crucially, payday lenders must also commit to work with debt charities like CCCS to set up affordable repayment plans when any borrower finds they are in difficulties.”

While payday loans can be an effective solution for short term cash flow problems, they are certainly not to be taken lightly. With responsible lenders, credit checks will be rigorously enforced to ensure the long term financial security of consumers.

If your contemplating a payday loan, make sure you choose a reliable and trustworthy lender that values their customers.

An experienced and talented copywriter, Matthew Wood writes SEO savvy content for a collection of online publications and web projects. Matthew’s latest work involves writing creative and engaging content on the subjects of Cash Advances and Payday Loans for the established online brand Ferratum.

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