Best-buy payday loans?
Update: 12 July 2013: On 9 July 2013 we published our Payday loan best buys? guide.
We’re in the middle of writing our new guide to payday loans (eg Wonga, Quickcash etc.) and I’d like to solicit your views. The key concept is actually to explain all the alternatives you can try before using that type of lending.
So it’ll be a big checklist hopefully providing people with alternative safer routes and options. Then we will have a section on what to watch for and how to make it as safe as possible if you do get a payday loan.
The debate
What we’re currently debating in MSE Towers is whether the guide should include best-buy payday loans (or perhaps least worst is a better view), but there’s a difference of opinion – so we thought we’d ask you.
My view – we should include the best buys
This market is now £1.9billion a year – so there are a huge number of people doing it. No matter what we do, people are going to borrow this way and while I would like hardcore regulation to protect people, it isn’t happening yet.
Thus it’s a bit like drugs, if people are going to do it, we should ensure they are safe. Here are my reasons:
- It gives us a chance to dissuade. Hopefully our best-buys will get search traction and then we can at least get the counter arguments and warnings in.
- It’s mostly a bad move, but not 100% bad. Most of the time it’s not a good move, but a few times it is. Sadly there are few alternatives to cheap short term borrowing – and there are worse culprits out there. For example, if you could borrow £100 for a week to stop you getting Clydesdale bank’s £35 a transaction bank charge, and repay on time, it’s much cheaper.
(Interesting isn’t it? We demonise payday lending but not bank charges, which are even worse for some than the 5,000% rates advertised). - There are big differences between the best and worst. Not all lenders are the same, so helping people choose when it’s right for them is worthwhile.
- Parliament wants this. I was giving evidence to the Business Select Committee on Tuesday and one of their points is about helping people choose if they are going to do it.
- We can factor in the safest ones. If we did it we wouldn’t just look at cost, but we’d also look at rollover policies, whether companies report loans to credit rating agents (a good thing as it helps prevent irresponsible lending) and most importantly their attitude to people who get in trouble.
For example, very few payday lenders co-operate with non-profit debt advisors like CAB and CCCS, making it difficult. We would try and show which lenders do co-operate – so if you got in serious trouble you know they’d behave reasonably.
MSE Wendy and MSE Alana’s arguments against:
Rather than putting the counter point myself, here are MSE Wendy and MSE Alana’s worries about it:
By including specific company names in the guide people may think we approve of the companies mentioned and even with the warnings, people could see this as an active recommendation.
There’s also the issue that there are enormous numbers of small local payday lenders across the UK, so we could only include the big ones in the best-buys.
What’s your view?
PS. We don’t intend to use any affiliate links (links that pay the site) to payday lenders – see how this site is financed.
Past related blogs
- Can you use payday loans to boost your credit rating?
- Fact: borrowing £100 at Wonga’s APR costs more than the US national debt (over $14 trillion) after 7 years!
- Don’t tell MPs I’m against payday loan regulation!
- MP says don’t cap interest rates, cap loan costs
- Should we worry more about 10% interest than 2000% APR loans?
