What Brexit could mean for UK Payday Loans

brexit uk payday loans

In arguably the biggest upset in the history of UK democracy, the decision for Britain to leave the EU has the nation completely divided. The recent EU referendum has seen a huge contrast in views and votes throughout Britain among different age groups and areas of the UK. We have heard expert analysis and views from members in both the Leave and Remain campaigns but no one knows for sure what the outcome and consequences (if any) will be.

On Friday the UK financial sector went into meltdown with over £200 billion wiped of the stock market within a few hours of the EU referendum results being announced. Many UK financial institutions have been quite vocal when it comes to the EU with many stating that it is vital for Britain and large corporate organisations to remain a part of it.

What impact could Brexit have on the UK

Remember back to last year when Scotland held an independence vote which gave the Scottish people a chance to leave the United Kingdom and become a country in their own right. The UK as a whole was desperate to keep Scotland an integral part of Great Britain and the outcome showed that Scotland was just as keen.

One of the main reasons for Scotland remaining a part of Britain was due to our close relationship with the EU. Now that the recent EU referendum means that Britain will now leave the EU this increases the chances of Scotland holding a second independence vote in order to leave Britain and re-join the EU in their own right.

If Scotland is to gain independence from the UK would they try and attract many of the large financial organisations from Britain who were so vocal about remaining a part of the EU? Rumours are definitely starting to swell with Goldman Sachs and Morgan Stanley reportedly planning on relocating their investment banking operations to Frankfurt, Germany.

How could Brexit affect Payday Loans

At present, Brexit would not have too much of an impact on the UK payday loans industry as many lenders will still be providing loans to UK consumers and will still be governed by the Financial Conduct Authority.

However if Scotland win the right to another independence vote and will likely vote on independence then they will no longer be a part of the UK. Many payday loan lenders offer UK payday loans, so with Scottish independence in the future more likely than ever this may mean that UK lenders can not lend to Scottish consumers as they will no longer be a part of Britain.

This may mean the Scottish payday loans industry is governed by a completely new entity with new lenders likely to enter the Scottish payday loans market.

Why are Payday Loans so popular with UK Consumers?

Payday Loans UK

The UK is the biggest global market for payday loan lenders with more than 3 million people taking out payday loans throughout the whole of 2015. It is estimated that the number of UK households that currently take out payday loans will increase to over 5 million by 2019, with inflated living costs and average personal debt consistently on the rise. Many people now favor payday loans over the more typical bank loans but just what did the payday lending industry become so popular with UK consumers?

Average UK Salary

The UK’s national average salary is £26,500 with living costs estimated at a huge £25,500 per year. Many UK households will turn to payday loans as an alternative solution for finance and most commonly to cover emergency bills and costs. With living costs consistently on the rise, this is seen as a major contributing factor to the huge increase in the number of short term payday loans being taken out by UK consumers.

Short term borrowing periods

Payday loans are first choice for many people seeking additional finances for a short period of time. With low borrowing amounts that can be borrowed anywhere from a week to three months, this allows many individuals to borrow for exactly the amount of time that they need to. With other personal bank loans, the option to borrow for such a short period of time simply doesn’t exist, resulting in unnecessary interest rate charges as individuals have no other option but to borrow for longer than they actually need to.

Fast Cash Transfer and Online Application Process

Figures released by the Money Advice Service indicate that up to 70% of people applying for a payday loan is the result of an emergency/unexpected cost, most commonly a car repair bill. The need for covering the costs of an unexpected bill as soon as possible is important for an individuals credit rating and to also avoid unnecessary bank charges that may occur.

Due to the fast nature in which an individual can apply for and receive a payday loan (typically within 2 hours of applying) this makes them almost the only option when it comes to emergency finance.

100% Online and Automated

Many UK lenders adopt only an online application service, which means the need to fill out paper work an provide bank statements and pay slips does not apply. Many UK banks and personal loan providers will insist upon reviewing your pay slips and credit history, however due to the online nature of payday loans this is not a requirement.

The need for fast and short term finance is something that is appealing to everyone looking to borrow money, however there are alternative methods to borrow responsibly such as Credit Cards and Overdrafts. Before applying for a payday loan you should be sure to seek advice and compare deals among the UK’s top lenders

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Payday Loans UK – A Brief history

Payday Loans Uk

The payday loans industry within the uk has garnered a bad reputation since they first launched back in 2008. Before the market was regulated by the financial governing body known as the FCA (financial conduct authority) many lenders had no one to stop them from charging extortionate interest rates to their customers.

High interest rates mixed with unrealistic borrowing terms meant that many people fell further into financial difficulty as a result of taking out a payday loan. However as the market was not regulated this meant that some of the first lenders on the market such as Wonga were able to basically create their own rules and regulations as their was no governing body to tell them otherwise.

Once the popularity of payday loans surged throughout the UK, the office of fair trading were brought in to add some sort of guidelines and regulations in order to protect the UK consumers that were stung by the huge interest rates and unrealistic borrowing terms.

This lead to a number of high profile fines being issued to some of the UK’s biggest lenders with Wonga being forced to write off over £220 million worth of debt debt owed to them by their own customers.

Since the introduction of financial governing bodies into the UK payday loans market, payday loans are now a more affordable finance option for many uk households with more than 3 million people turning to payday loans every year. The FCA recently imposed a 0.8% daily interest rate cap to further reduce the risk of financial difficulties when taking out any form of payday loans.

There is no question that the payday market is more popular than ever, with fast application processes and almost instant online decisions added with fast cash transfers and easy repayment setup, payday loans continue to lead the way as the most popular form of personal finance ahead of bank loans and overdraft facilities.

With many UK payday lenders opting for a 100% online service in order to further reduce the hassle and stress of applying for additional finances, many banks and building societies have opted to follow suit, with many now offering online services.

You can apply for same day payday loans online at www.paydaypixie.co.uk

UK Payday Loans Online Apply Now - www.paydaypixie.co.uk