People are being advised to be aware of ‘dodgy’ lenders who are offering finance to people with little or few conditions attached. In the run up to Christmas, many people look for a little bit of extra cash to buy last minute gifts or getaways. According to the Consumer Finance Association there has been a surge of new holiday themed loan websites which are coming up at the top of search engine results for people looking for Christmas loans.
These seemingly great loan companies frequently fail to act as responsible lenders by not carrying out the necessary affordability checks on the borrowers. They also do not always outline the possible risks of borrowing in the form of a payday loan.
The Money Advice Trust
These loan companies are taking advantage of vulnerable individuals who are in financial need. Loan lenders acting in this way have not gone unnoticed- the CEO of the Money Advice Trust, Joanna Elson spoke about the situation recognising that Christmas ‘is a difficult and expensive time of year for many families and the people behind these websites know that’.
She also spoke about the difficulty of dealing with these dishonest lenders- whilst sites are being reported each year, new sites continually appear online. Elson advised borrowers to be cautious and remember that if a loan sounds too good to be true ‘it probably is’.
Many of these lenders take your personal details which could be sold to other companies. If your details are passed on, it is highly likely that you will be contacted by numerous other companies who cold call lists of individuals without knowing their situation. Many also charge up-front fees even before any loan agreement has been reached.
How To Avoid The Trap
There are some key questions you need to ask yourself when using payday loan lenders this Christmas. National Debtline recommend asking these 5 key questions –
Is the offer too good to be true?
Always be sceptical when looking at a loan company- if what they are offering sounds a bit too good to be true than it is likely that it is. Companies offering to solve all your problems in the click of a button or appealing to your emotional side to manipulate you into borrowing should set off alarm bells!
Does the website contain mistakes and/or inconsistencies?
With the holiday season in full swing, many of these Christmas payday loan lenders set up their websites in a rush. This can lead to errors in spelling and grammar which would normally be picked up on and corrected if the lender was genuine. If the content of the website appears muddled or incorrect, this should also be a warning to you.Has the company provided contact information?
Has the company provided contact information?
A key indicator that something is amiss is a lack or absence of contact details. If a company does not have an address or contactable phone or email this is a definite sign that something isn’t right. Make sure you can contact them before filling in any contact details yourself.
Does the website disclose a valid FCA authorisation number?
It may sound cliché, but always read the small print. Every genuine lender will display their FCA number on their website so if you cannot find one then stop! You can check the FCA website also to check if the company is an authorised lender- if they are not they should be reported to the FCA for lending without registering.
Is a Christmas loan the right solution?
The key question you should be asking is not about the lender but about your own situation. We know that Christmas payday loans can be tempting but before taking out a loan consider the other options. You can get free financial advice from services such as the Money Advice Service or National Debtline.
Do not let the holidays be spoiled with worry- be a safe, smart borrower and enjoy the festive period.