Are you interested in understanding how payday loans work around the world?
Did you know that apart from the UK, other parts of the world also offer payday loan services?
We embarked on research about payday loans in Canada, Europe and the USA. We were able to find out valuable information in these places and we deemed it right to share it with you. In this world wide payday loans guide, we have included the rules and regulations on the researched countries, some amazing facts and figures concerning borrowers.
Most of our consumers are well conversant with the rules and laws governing payday loans in the UK. The 2014 loan caps the at were introduced by FCA are now old news. We conducted thorough research to ascertain who our clients are; the population segment that frequently takes payday loans with us. We have included in the findings of our investigations on over 20 occupations in the UK.
We were eager to know how payday loans look like around the globe. Is there any difference from the UK payday loans?
We now present our research findings. In most occasions, the payday loan market structure was alike to that of the UK. However, there was so much difference in other places. We were also captivated by how some authorities outlawed payday lending all together while others were reluctant to regulate it.
In addition, the contrast between typical borrowers were interesting prompting one to interpret the general demographics of the location.
Worldwide Regulations for Payday
Considering the fact that Texas is the second-largest state in the USA, payday loans are very popular.
Texas is known for a number of economic activities, prompting people to source for emergency funds to solve temporary financial emergencies. The state had to regulate payday loans because they were taken out regularly.
The unique payday loans model used by lenders in Texas allows them to use Credit Service Organizations rather than following state regulations. CSO work in conjunction with independent lenders who funds the loans.
In comparison to other States in the USA, Texas practices is illegal. First, no restrictions are put in place such as renewal bans like other States. Averagely, Texas payday loans are characterized by higher interests (USD 522). In addition, there are about 2617 lender stores.
According to studies, it is established that 6.3% of Dakota’s adult population have taken a payday loan. On average, a 14-day loan of USD 100 has an APR of 14% and 520% interest. Every payday loan borrower is allowed only to take up to 50% of the monthly net salary. In the event of the borrower defaulting loan repayment, an extension of 20 days is allowed inclusive of one renewal and deferral.
British Columbia has stringent regulations limiting the number of payday loans one can take at a time. However, this hasn’t barred the region from topping the list of payday loan users in entire Canada. Generally, a borrower can take a maximum of 50% of their net salary or USD 1500 with a loan term of 62 days. In this province, you are required to disclose your APR and you can cancel your loan at the end of the following day without footing any charges. On defaulting, an interest of 30% is charged.
Quebec is governed by Usury laws that consider any interests above
60% criminal. As a result, there are hardly 32 in stores and 10 online payday lenders which offers a maximum of $1000 and APR of 24%.
The Financial Conduct Authority (FCA) is responsible for regulating payday loan in the UK.
The high-interest rates associated with payday loans have prompted the introduction of strict new rules aimed at protecting the customers. In the new law, customers are now required not to pay lenders more than 100% interest on the principal amount (inclusive of interest, fees and charges).
The new law has also limited the number of time lenders can access a borrower’s account to settle outstanding quick loans. Most payday loan lenders give an average of £260 with a repayment period of 22 days. In addition, borrowers are not allowed to pay more than twice the amount they borrowed. It’s worth noting that default charges are capped at £15.
The best way to appreciate the services offered by one lender to another is through conducting a detailed comparison process. Different payday lenders offer different unique lending rates. From our research, you can see that there are varying regulations on payday loans across the world. The UK’s financial market is similar to that of other parts of the world. However, we cannot forego the fact that there exists a huge difference between it and other parts of the world.
A payday loan comes in handy when you’re hit with an emergency and can’t source the money from elsewhere quickly. However, you should note that payday loans should be your last resort; it is relatively expensive.
The modern technological advances have made it possible for the payday loan to be marketed conveniently. You can now apply for a payday loan and get it approved the same day. However, the high-interest rates should make you think of them as a last resort instead of an easy option.
You can opt for the below alternatives before settling on a payday loan lender,
Speak to your bank: a mare imagination of you walking into a banking hall to seek a financial bailout may sound uncomfortable. However, the truth is that your bank can temporarily your overdraft limit for a certain agreed duration.
Family and friends: Based on your personal relationship and trust between you, your family and friends, they can bail you out of financial turbulence. These should be the first people you run to first for assistance.
Based on borrowers discretion, most worldwide payday loan lenders offer round.
You will have to go through the Consumer Credit Agreement to ascertain how you should proceed with your cancellation if need be.