When taking out a payday loan, it’s essential to approach the market with a great deal of diligence and scepticism. Generally, payday loans should only be used when there is no other lending option available, as a short-term loan; not as a long-term option; and as such, it’s essential to compare different products –and read the fine print- in order to find a lending product which meets your needs.
With the stratospheric increase in the use of short-term lending products (largely a result of the global recession in 2008), many working class people began to find themselves in dangerous spirals of debt, in which they borrow money to make ends meet; pay the debt off once they’d received their wages, and then find themselves short again not soon after. The interest levels were -initially- extremely high, so it wasn’t long before regulation was put into place to cap the interest levels which can be charged and the late fees which can be applied.
The Financial Compliance Authority (FCA) put into place regulations against the way that they are advertised on price comparison websites such as www.allpaydaylenders.com; the regulations ensure that payday lenders cannot mislead customers by paying to have their products rank higher on such websites. This helps to give customers a more transparent interface when searching for a payday loan; allowing them to make more informed choices based on their search criteria and requirements.
Not only has this new legislation ensured that Payday lenders have to be clearer and more open about their products, services, prices, interest rates, fees, and other potential costs to customers, when advertising their services on price comparison websites; but they are now required to list their services on a price comparison website as a standard.
The FCA was quoted saying “[we intend to] require credit brokers acting as price comparison websites to rank HCSTC products in ascending order of price according to the total amount payable and to ensure that the rankings are competitively neutral and do not give products greater prominence as a result of commercial relationships”.
This helps to protect customers from usurious or misleading companies and practices, allowing customers to choose a product which suits them, with clear and accurate information.
Despite this, Price comparison websites will still be allowed to accept paid advertising from payday lenders, but these must be listed outside of, and separate to the ranking tables, and not interspersed within them (giving the impression that they are of a lower price). These rules will apply to all financial promotions, including sponsored links and featured products. Sites such as www.allpaydaylenders.com and other payday lending comparison sites will have to make a clear distinction between what is a ‘sponsored advertisement’ and what has come up under the customer’s search criteria and filters.
The money made from advertising is the main source of income for price comparison websites of almost all types (whether it’s hotels, auction or holiday sites), for this reason, it’s not really viable for the FCA or any other regulatory body to demand that Payday lenders cannotpay for advertising, as this would most likely put the price comparison websites out of business, making it far more difficult for customers to find a lending product which suits their needs.
As quoted by the FCA; the main list of results “must not be ranked according to any commercial interests and must not be given greater or lesser prominence as a result of those interests and the FCA’s rules on financial promotions, which require those promotions to be clear, fair and not misleading, will apply.”
It is highly recommended that customers considering taking out a payday loan take the time to be vigilant, checking price comparison websites for the best deals, and ensuring they are not misled by sponsored advertising.