Having bad credit is not a positive thing, especially when cash is needed quickly. In most cases, it results in an individual securing high-cost, no credit check loans. Though the borrower bypasses the credit check process, the price paid for this convenience arrives in the form of a high interest rate.

Payday loans, home credit, and doorstep financing were created for the financially vulnerable and can worsen the situation of these borrowers. Despite this, the Office of Fair Trading reports that consumers are served well by the sector and complaints were minimal.

Financial services experts fear that banning payday lending could drive some people to deal with illegal loan sharks.

Over the past four years, the number of individuals using payday loans has quadrupled. Experts are requesting the introduction of methods that will prevent consumers from becoming too dependent on this financing. They prefer that building societies and banks establish short-term credit designed for consumers who are strapped for cash.

Until that happens, those who need cash and do not qualify for loans bank offered should do their homework before approaching a payday lender. Consumers should be aware of all financing options available to them and the associated costs because payday lending may not be the best option.

They should avoid borrowers who impose an up-front fee and when taking the loan, they should understand how it works, including fees, charges, repayment period, interest rate, and repercussions of failing to repay.

Individuals should stay away from lenders who contact them through cold calling. Some unscrupulous lenders offer to assist people with finding a loan and then charge these individuals fees for a loan that never comes to fruition.

According to some research, targets include people who are unable to obtain loans bank provided due to poor credit history or financial problems.

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