Payday Loans and Responsible lending

At PaydayBank, one of the UK's leading payday loans brokers, we are proud to be a responsible lender. We aim to actively follow reponsible lending practices:

We will not encourage customers to take out a pay day loan if we feel this is not the right product for them
We will not target people who are in debt or in financial problems
We will not encourage people to borrow more than they can afford to repay
We will not charge our customers unnecessary fees

On top of that we also:

aim to give customers a clear, full, understanding of the service we provide
follow legal and ethical marketing practices

What do I need to do to borrow responsibly?

First of all, make sure that a payday loan is the right thing for you. If you do not feel that you will realistically be able to pay it back in a timely manner, you run the risk of incurring extra charges by rolling over the loan. This will then be likely to gain interest at the same rate as the original loan, which can quickly mount up.

If you do not feel you can afford to take out a payday loan, we recommend that you do not. If you are finding debt problems to be a regular issue, please check out the government debt advice website for some useful information and advice.

What is responsible lending?

Banks and Building Societies who offer loans are obliged to abide by what is regarded as responsible lending under the lending standards board code.

The Banking Code is a self-governed set of rules which are followed by banks and building societies. These rules relate to how they deal with personal customers, and ensure that borrowers won't get too far into debt. They also include various commitments to try to ensure customers are treated fairly throughout the process, and don't get into further financial difficulties.

The Responsible Lending Code specifies the ways that lenders should conduct themselves before and after the payday loans are sold. This means lenders must provide exact, complete information which includes a clear and concise description of the loan in advance. The financial situation of the borrower must be assessed based partially on their history with credit, but primarily on their immediate ability to repay the loan, taking into account their current credit commitments and income.

Another important aspect of responsible lending that the code requires is that information must be clear and transparent. Key information needs to be grouped, highlighted and clearly explained including examples. This includes all the different charges and APRs, giving the customer the ability to compare products using one method. The code requires that there should be a single method for calculating the levels of APR and a standard way of calculating interest rates. This is why we display the APR clearly across our website, even though we don't agree that it's the clearest way of displaying payday loans.

Responsible lending includes notifying the customer as to all the pros and cons of the loan, including actual warnings such as early settlement costs etc. The responsible lending code also details the way customers should be dealt with after the loan has been sold. Banks are required to use systems that limit automatic, unsolicited credit such as limit increases or checks.

In cases where borrowers experience financial difficulties, the lender must be committed to seek genuine solutions which include proportionate,reasonable measures to reschedule payments when possible and to co-operate with money advisers in order to find the best solution for the problem.

The need to determine a best practice code for responsible lending has never been greater. The debate is ongoing and changes are constantly being made to the Consumer Credit Act and the Banking Code as the industry attempts to find the best way to handle relationships between lenders and borrowers.

The global banking industry has been revising its codes following the events experienced by less creditworthy US mortgage customers, many of whom were offered cheap home loans which they were not able to repay. This mortgage crisis has had a global effect on economies worldwide and was regarded to have been a factor in leading the US and UK economies into recession.

The revised code commits banks to tighten their credit checking procedures prior to loan approval and to be able to provide more assistance to customers who find themselves in financial trouble.

Payday Bank is proud to be responsible lender, and actively attempts to warn customers not to borrow more than they can afford and to make sure they are able to pay back on time, as well as providing as much clear, concise information as possible.

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