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Payday loans - new rules for lenders
Date: 26 November 2012
A pay day loan is a short term loan intended to tide you over until you next get paid, with high interest rates.
A good practice customer charter has been brought in by the four main trade associations setting out what you can expect from payday lenders. Most lenders belong to one of these trade associations. If you aren’t happy with the service they provide and they don’t meet the standards in the charter, you can complain.
Under the charter lenders agree to give clear information about how the loan works and any fees and charges. They must check whether the loan is suitable for you taking account of your circumstances and how much you want to borrow.
You mustn’t be encouraged to borrow more than you need, and lenders must make sure you can afford to repay, considering other expenses or loan repayments you have. Loans should only be extended if you ask about this and if your lender reminds you of the risks of doing this.
Lenders must explain that you can set up an agreement to have money collected from a payment card, if they offer this facility. They must also explain that you have the right to cancel this method of paying.
If you have problems paying the money back, lenders must deal with you sympathetically, considering new arrangements to pay and giving information on where to get debt advice.
Lenders must also give details of how you can complain to them.
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More about payday loans
- Find out more about payday loans
- Reasons to complain to your lender
- How to make a complaint, including a letter to help you
The full details of the charter can be found on trade associations websites:
- Consumer Finance Association (CFA) at: www.cfa-uk.co.uk
- British Cheque and Credit Association (BCCA) at: www.bcca.co.uk
- Consumer Credit Trade Association (CCTA) at: www.ccta.co.uk
- Financing and Leasing Association (FLA) at: www.lendingcode.org.uk