Invested Credit

payday-fireAmong the many regulatory issues that the payday lenders are currently facing, the problem with their adverts and their implications is another reason of concern for financial regulatory authorities. The catchy adverts of these companies are allegedly promoting an easy-going attitude towards borrowing money and spending more than you make without thinking about consequences. Several researches have been conducted with the result that these adverts are promoting an instant gratification culture, not just in grown-ups but in kids as well.

The payday lenders are already facing regulatory issues and several allegations regarding their debt recollection practices and their extortionate fees and charges. Their irresponsible lending practices are causing them considerable trouble. Now, with another issue to face, these companies can get into even more trouble than before. However, this is not the first time the adverts of these payday lending companies have come under scrutiny. A few of them have been banned in the past for giving out an inappropriate message to consumers and developing wrong attitudes towards borrowing.

The main concern behind the issue that has made it a major issue is the increasing impact of these adverts on kids. As these companies use catchy slogans and jingles in their adverts, they are catching the attention of children more often and children are found to be repeating these slogans and jingles. A research has also shown that kids today are nagging parents to get quick loans to buy more toys for them as presumably these loans are “really easy to pay off”. The lending company Wonga even released a movie that seems to be promoting payday lending and the lifestyle it can unassumingly give to customers.

This indicates an irresponsible attitude in kids towards money management. Researchers indicate that these adverts are not only promoting a culture of instant gratification for now but also giving way to an upcoming generation of borrowers that considers payday loans to be an easy solution for all their financial problems without fully understanding the consequences and risks involved. According to several consumer rights’ groups, these companies are trapping families into a cycle of un-payable debt that leads them to a financial crisis.

These companies are being are being prompted to undertake more responsible lending measures and ethical recollection techniques. They need to inform the audience about the hazards of becoming habitual borrowers instead of promoting the practice as a thing that can bring satisfaction. These payday lenders try to defend themselves by indicating that they are not completely aware of the impact they are causing on the society or by claiming that these reports are not true at all.

The responsibility of responsible borrowing and more careful attitude towards money management also lies on the consumers themselves. Getting loans from unregulated payday lenders, and exposing yourself and your kids to such adverts is irresponsibility on part of consumers. Consumer education regarding their rights as borrowers is another initiative that needs to be promoted by the regulatory authorities.

Lending companies are helping consumers find more responsible lenders while they search for online payday loans. Some companies clearly state they provide a matching service and offers full disclosure of the process. There are many matching services that try to trick consumers into thinking they are direct lenders which is were the problem lies. Further FTC intervention will be needed to weed out the “bad apples”.

signing a loanA personal loan is when an individual borrows an amount of capital for personal use from a financial institution. The borrower is able to use the cash for anything they want, such as new car, perhaps some home improvements consolidating bills or a vacation.

People who take out a personal loan is required to make monthly payments to the borrower, repaying the principal plus the interest accrued on the loan. Personal loans provide borrowers the flexibility of being able to make purchases while not accumulating the funds first. Many financial lenders are able to offer several types of personal loans, with the main difference being the interest rate as to whether it is fixed or floating.

Personal loans fall under two categories, unsecured or secured. A secured loan is when an asset is pledged by the borrower, providing a piece of collateral in exchange for the loan and a more favorable rate. If the borrower is unable to pay off the principal and interest and effectively defaults on the loan, the bank offering personal loans has the legal right to take possession of the asset.

An unsecured is different in that there is no asset put up as collateral. The terms of the loan agreement are determined by the creditworthiness of the borrower. If an individual winds up defaulting on the loan the financial institution has the right to take legal action against the borrower. Normally, both the interest and the principal must be paid in order for the debt to be satisfied. Read the rest of this entry »