On 9th October 2014, the Competition Markets Authority payday loan proposal was presented to increase the use of payday loan comparison sites in the UK above all to help borrowers save on the cost of their loans. Given that payday lenders have different rates with some offering an APR higher than 5,000% and some offering lower than 1,000%, there is clearly an opportunity to price compare.
In a study carried out by the Payday Lending Investigation Group, they discovered that by not using price comparison websites, borrowers could be adding £5 to £10 to the average cost of their payday loan. If we base this on a typical payday loan of around £260 and given that the average borrower may take up to 6 loans over the course of a year, this could mean that some customers are paying an extra £30 to £60 per year more than they need to.
Simon Pollito who is Chairman of the Investigation Group highlighted the following points:
How customers will save on payday loans
The role that comparisons sites have in the payday loan market is a big one. Taking into account that there are over 1.8 million borrowers of payday loans each year, the opportunity to pay less simply choosing another lender is very appealing. The CMA will encourage comparison sites to possibly change the way they display their information and this may include the following:
What we offer
The Lenders List is very straightforward price comparison website for payday loans. We do exactly what we say on the tin – we are a list of lenders. Simply listing the lenders, you can click on ‘more details’ to see an individual breakdown of the company, the checks they do and the prices they charge. Our service is completely free to use and we do not take down a user’s details and pass these on anywhere.
One important feature of The Lenders List is that the companies we promote are direct lenders and we do not work with brokers. The reason for this is that we only want customers to be able to compare companies that can directly put the funds into your account. We don’t want there to be any further middlemen especially when they want to get their loan quickly because its an emergency. With hundreds of lead generators in the UK, it is sometimes hard to determine who is a lender and a broker.
The CMA has found that many borrowers believe that lead generators are themselves actually lenders rather than simply middlemen. Customers are generally unaware that, rather than matching borrowers with the most suitable or cheapest loan on offer, lead generators instead sell borrowers’ details to lenders based on the fees lenders offer to them.This is briefly mentioned in the checklist above – as soon as a user applies through a broker, several lenders may check the customer’s credit score and numerous checks on ones credit file can be damaging. A simple comparison site will prevent people from having their credit file being checked as it will only be checked on those that apply on a lender’s website. The changes above will certainly drive competition and above all, push the lenders to offer more affordable prices and default charges in order to feature better on price comparison websites. The Lenders List offers a very simple way to find a direct lender who can transfer the funds to your account today and by browsing through the site in more detail, users will be able to compare the length and cost of a payday loan efficiently.