Financial problems can be very stressful, but sometimes the “cure” can be worse than the “disease”. An attempt to solve stress caused by money problems shouldn’t create more stress, but for some people, this is exactly what occurs due to the unscrupulous practices of some financial product providers. People dealing with money issues are often uniquely vulnerable, and it’s easy for them to fall into these companies’ traps. You can avoid such a fate by educating yourself about the choices available to you when you’re in a cash crunch.
Keeping the wolf from your door(step)
It wasn’t too long go that the new payday loan industry was feeling its oats, with some lenders engaging in predatory practices that left too many borrowers so badly in debt that emerging from their situation seemed almost hopeless. Fortunately, if somewhat belatedly, the Financial Conduct Authority (FCA) took some needed steps to regulate the new sector of the lending industry and eliminate the most egregious of those practices.
Apparently, there is a group of “new kids” on the financial block, called doorstep lenders, who actually physically deliver the cash, then physically show up to your home, workplace, or wherever they can find you, to collect their payments. Unfortunately, some of them seem to have read the same playbook as the early payday lenders and modified it, albeit only slightly, to fit their own purposes. According to a February 2017 report compiled by the Citizens Advice debt charity regarding doorstep loans, some of these lenders have caused serious hardship for borrowers.
Like the worst of the early payday lenders, some of these doorstep lenders paid little heed to whether borrowers would be capable of repaying the loans at all, much less on time. And when the borrower couldn’t pay, the lender would show up and demand immediate payment, even to the point of refusing to leave until they accompanied the debtor to an ATM to withdraw the money. Also like other predatory lenders, the lender would pressure the borrower to take out additional loans to cover the outstanding debt. When those loans were compounded by astronomic interest rates and assorted fees, the borrower was too often left in far worse condition than when he or she started. Caveat emptor, indeed; let the buyer beware.
Separating the wheat from the chaff
No matter how desperate your situation or how urgent your need for cash, taking a little bit of time to research lenders can help you avoid situations like those mentioned above. First, choose the right kind of lender. It’s important to know that even if you have poor credit, there are plenty of choices that do not fall under the category of – or pose the same risks as – a “doorstep lender”.
Devote a little time to research so you can find a lender who will not only offer affordable terms, but also has a reputation for treating customers fairly. If you need a relatively small amount of money and can pay it back within a short period of time there are options available to you, from lenders who won’t take advantage of your situation or show up at your front door the moment your payment comes due. There are the usual caveats, of course: borrow only what you actually need, research carefully, be sure to pay loan back in time, and don’t think of high-cost loans as a long-term solution for ongoing cash flow problems.
Know when and how to complain
While the vast majority of lenders conduct their business within the law and treat their customers fairly, there are always going to be bad apples. Fortunately there are protections in place for consumers, and the Financial Conduct Authority web site is an excellent resource if you feel you have been treated unfairly.
The site contains a wealth of resources for consumers to help them understand their rights when dealing with banks, mortgages, and different lenders. It offers good general financial advice, but as always, you should not rely solely upon such information in making your financial decisions. For that, you’ll want to consult with a professional advisor, who can deal with the specifics in your case. At the very least, however, the FCA site provides information on how to avoid scams or how to complain if you feel you’ve been dealt with unfairly or illegally.
Having a thorough knowledge of your rights as a consumer and being willing to research financial product providers before putting your trust in them are essential elements of successful personal money management.