If you are at your wits end, worrying about how you can get enough cash to meet an urgent upcoming bill or expense, a short term loan or similar alternative, could well be the answer. A short duration loan (like a short term loan) can offer a genuine way of tiding you over. If you chose your loan provider carefully, it’s a good way of avoiding the more unscrupulous loan sharks who charge exorbitant amounts of interest. Going down that route can land you in more trouble than you bargained for.
short term loan complaints plummet
Short term loans have been given bad press in recent years, but thanks to a recent news article published on the official BBC news website this may now be changing. It appears the Citizens Advice Bureau (CAB) has reported that in the past 12 months, complaints regarding short term loans have dropped significantly by 45%.
The reported drop in complaints follows on the back of recent changes that the Financial Conduct Authority (FCA) has implemented. One significant change was the imposition of a “cap” on short term loans that came into force in January this year. At the beginning of last year (between January and March; before the introduction of the new cap) the number of complaints registered by the CAB during this period was 10,155. However, this year, across the same period, and as mentioned above, complaints have plummeted to 5,554 – a 45% drop.
The fact of the matter is that people often have no alternative other than to borrow money to get themselves out of tight fixes. The mood change in terms of how loan providers are being perceived will therefore come as a welcome change to those in need. Top short term loan providers like Wizzcash.com are now offering more palatable fixes. A visit to their website reveals their current rates are well below the FCA ceiling.
FCA takes a strong stance
The FCA actually assumed control of the regulations governing the short term loan marketplace in April 2014. As well as introducing the cap on loan amounts, they have also introduced another new rule regarding the number of times that a loan can be rolled-over. By allowing roll-overs, unscrupulous loan companies can keep extending the repayment date, which may on the surface seem helpful to borrowers, but in actual fact means that they pull in high interest rates over a longer period of time.
In addition to the cap on loan amounts, the FCA has also now put a cap on the size of repayments and has limited the amount of advertising that’s permitted. The fact that complaints have dropped so drastically in terms of volume, tends to indicate that taking a strong stance against irresponsible lending really does work.
Details of the new caps on loans, interest and repayments
The new cap on repayments means that no one can be asked to pay more than 0.8% per day on the amount of the original loan. In addition, no one has to repay more than twice the amount that they borrowed. These new regulations are not only good for those applying for loans; they’re also good for the industry itself.