Loan brokers - why you should avoid them and how you're protected
If you want to find a loan online, what does a loan broker do? And why are regulators cracking down on them?
If you’re after a loan, you might think you’d get access to the pick of the lenders if you use an online broker. But you’d probably be wrong. You’d probably be asked to pay an upfront fee (usually £50 - £75), but there would be no guarantee you’d get a loan. In fact, many people have complained that they’ve had money taken from their accounts by loan brokers they’ve not signed up to.
If you need a short term loan, you're much better off getting one from a credit union than a payday lender.
Credit Unions are not for profit savings and lending institutions run by and for their members. By law they can't charge more than 42.6% APR for a loan (it used to be 26.8%, but they are now allowed to charge more). However many charge far less. What do you need to know if you're thinking of using a credit union?
Interest on payday loans will be capped at 0.8% a day from January 2015
The Financial Conduct Authority (FCA) said it plans to limit payday loan interest to £24 for £100 loan over 30 days
Payday lenders will not be able to charge more than 0.8% interest a day from January 2015. That's been confirmed today (11th November) by the regulator, the Financial Conduct Authority. That works out at £24 for every £100 borrowed over a month. Importantly, if you borrow from a payday lender you will never owe more than twice the amount you borrowed.