The fresh rules of payday loans explained – Mirror Online

Exceptionally convenient and potentially ruinous, payday loans now have to obey a fresh set of rules. Here’s what they are and what means for you

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  • 09:27, Two JAN 2015
  • Updated 09:35, Two JAN 2015
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Effective January Two, payday lenders are required to be fairer, in many cases cheaper and have been outright banned from a string of their least pleasant habits (sadly, not the adverts).

As a result more than 100 payday loan firms have been driven out of business – 30 being shut down and another 70 simply stopping suggesting them, while 450 high-street payday loan shops have closed.

“Today’s crackdown on the payday lending market comes not a moment too soon. Lenders must now commence challenging on price and treating their customers fairly,” said Which? executive director, Richard Lloyd.

But what are the switches and do they mean a better deal for you?

The fresh rules

Lenders cannot charge more than 0.8% of the total amount borrowed a day. This includes both interest and any other fees

Lenders can never, ever charge more than 100% of the amount borrowed – no matter what charges are incurred or how long the debt lasts

Charges for late payment etc can never be more than £15

Do the fresh payday loans rules go far enough?


What they mean

That all means that if you borrow £100 for 30 days, you should never be charged more than £24 in interest and charges. On top of that, even if you fight to pay the money back, you will never pay back more than £200 in total.

Expensive, yes, but better than the situation before when debts could potentially spiral into the thousands.

“Payday lenders have been holding vulnerable consumers to ransom with excessive rates and fees for far too long,” said David Mann, Head of Money at .

“It’s high time these regulations were brought in, to break the cycle of extortionate lending and force unscrupulous lenders to radically switch the way they do things or stop lending altogether. These rogue traders will only react to raunchy act, and this is the hardest we have seen yet.”

Fresh Payday loan rules

How much you can be charged a day

The most you will ever have to pay back

The most you can be charged in fees

Who do I complain to?

Under the fresh rules, the Financial Conduct Authority – the same people that regulate thew banks – can step in if a payday lender violates the fresh rules.

If you feel you have been hard done by, you should raise the issue with the lender and if the payday loan company doesn’t deal with your complaint, you can take it to the Financial Ombudsman service eight weeks after very first raising the issue.

Using a free online complaints resolution service can help you track your complaint and lets you know who to contact when.

Related movie: individual loans no fees upfront

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