Wednesday, August 28, 2013
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What Makes A Payday Loan UK Different
What Makes A Payday Loan UK Different
Although what is known as a payday loan UK was first conceived in the US, it is very much present in the UK as also a few countries around the world. In fact, such loans have become so popular in the UK that the payday loan market has nearly grown four times since 2006.
What makes a UK Payday Loan Different?
In fact, in the UK payday loans make up for about twenty per cent of the entire loan industry and the legal norms for applying for these loans are also different from that in the US and other countries. In the US, the government has fixed the rate of interest and other charges payable by the borrower whereas in the UK, these laws are much less stringent. Lenders in the United Kingdom are free to charge APRs as they think fit.
Laws in the UK, however, stipulate that the APR must be clearly stated in all loan documents pertaining to the loan application and advertisements that the lender may give out in the print and electronic media. However, the prevalent practice is that it has not attracted criticism from borrowers because they get a chance to compare different rates offered by different lenders and then opt for the one that suits them best.
Unlike in the US, where recent regulations at the state level stipulate clearly which party can withdraw a payday loan and where, the UK leaves it to the discretion of the lender and the borrower. This has given both parties in the UK the liberty to make their own choices and made the business flourish whereas severe regulation in the US has either heavily restricted the functioning of the payday loan industry or led to their winding up. Additionally, the US does not allow its military personnel to take such loans. On the contrary, there are no such laws or regulations in the UK which allows any qualified and adult individual submitting proof of permanent residence in the UK and regular income to take a loan at an annual rate of interest that the lender may charge. Furthermore, being an American citizen only makes you eligible for a payday loan whereas in the UK, your citizenship has to be of any area covering England, Wales, Northern Ireland or Scotland if you want to qualify for a loan.
In the US, it is also stipulated that one has to be employed for at least six months before being eligible for a loan whereas this is not the case in the UK. The loan taker must, however, have a valid bank account for at least six months. In sum, it is the lenient laws of the UK which is making the payday loan UK concept more popular and its demand keeps growing. Whereas in the US, some very strict laws are regulating the business to such a degree that some of the payday loan companies are even winding up. However, the British have been much helped by it especially in emergencies.