Cost of Alternative Consumer Borrowing

A huge drop in payday loans given out to people short on money has increased fears of a rise in borrowing from illegal lenders. Yet safer, cheaper ways to borrow do exist and they should be your first port of call if you’re looking for some quick, short-term cash options.

 

Fall in payday loans

Today’s report by the Consumer Finance Association (CFA), the trade body that represents short term lenders, says eight out of ten short-term loan applications are now turned down.

CFA figures also show the number of payday loans given each month in 2015 is 70% less than in 2013.

This fall in people receiving payday loans follows tighter regulation of the industry. This includes new rules introduced last January that caps the fees and interest that can be charged to no more than double the amount borrowed.

 

Loan shark dangers

If you’ve been turned down for a short-term loan, it’s no surprise you may look elsewhere for the money.

The CFA report suggests that 4% of people who are rejected for short-term lending go to unlicensed lenders instead. The same survey also showed that more than three quarters of people are unable to tell if their lender was licensed or not.

If you search online, for a loan, watch out for websites which look legitimate but are really based overseas. They won’t have to follow the new regulations capping fees and charges, so you could end up paying far more than you expect.

However, loan shark lenders are probably the worst option. Though these illegal lenders will often start out friendly and supportive, not only are interest rates far more than elsewhere, missing payments could lead to harassment or pressure to borrow more money to cover costs.

 

Alternatives to payday loans

Instead of going down these routes and taking on additional debt, consider all the alternatives available first.

Depending on why you need the money, you’ll find lots of different options. You might even find you don’t need to borrow money at all.

Below is an example of the costs of alternative consumer borrowing;

 

LFgraphic_borrowing

About LendFair

LendFair are lenders that offer short to medium term loans where you repay interest and the original advance by defined, manageable monthly payments.

Our loans are fair and transparent.

Fast Fair £500 – £5000 Guarantor Loans

Who uses LendFair?

People who need a short to medium term loan with fixed monthly (affordable) payments, at a fair rate of interest. If you could easily get a loan from a Bank or Building Society, then this is likely to be your best option. For those that can’t get a traditional loan, LendFair may be the best and cheapest option. A number of our customers have used LendFair loans to repay very expensive payday loans or restructure credit card debts and get their total borrowing and repayments under control.

LendFair was created to provide “alternative loans” to some of the worst and most expensive loan products on offer such as Payday loans and unregulated doorstep lending, and because traditional bank and credit card loans were being squeezed or were becoming harder to obtain due to the banking crisis.

We aim to provide fair, responsible, transparent loans to responsible borrowers, at fair rates of interest with affordable repayments. We are regulated by the Financial Conduct Authority (FCA) and hold a Consumer Credit License, No. 0650429.

Based in the UK and easily contactable we currently offer term loans between 6 & 60 months where the loan is guaranteed by a friend or relative (the Guarantor) in the unlikely event of your default.

We do not offer Instant loans or Payday loans. You will need a guarantor and we also need you to demonstrate affordability, ie you can afford the monthly repayments.

LendFair was created to provide “alternative loans” to some of the worst loan products on offer such as Payday Loans and unregulated doorstep lending and because traditional bank and credit card loans were being squeezed or were becoming harder to obtain due to the banking crisis.

We aim to provide fair, responsible, transparent loans to responsible borrowers, at fair rates of interest with affordable repayments.

Why not consolidate your Payday loans with a lower cost Guarantor Loan?

Mike O’Connor, chief executive of StepChange Debt Charity, when interviewed recently, noted the following. “While the number of people coming to us with payday loan debt problems is falling, we continue to see problems with unaffordable lending and people struggling with multiple loans”.

So, good news that payday loans are falling, but is that a case of lower demand or simply a squeeze on the Payday loan providers by the FCA? In either event a Guarantor loan, at significantly lower APR, may be the answer to unaffordable or unavailable Payday loans when needed. Lendfair offer a Guarantor loan of just £500, but you can borrow up to £5,000 to consolidate multiple loans. A £500 Lendfair loan to replace a payday loan costs just £16.60 in interest in the first month, with regular repayments from just £30.55 pcm. APR 48.0% Compare that to your payday loan. www.lendfair.co.uk