Staffordshire County Council point out that, because of a recent tightening of US credit laws in a number of states, some American lenders may be coming to the UK because payday loans: “Exploit a loophole in existing UK consumer credit laws…”
These loans bypass existing laws governing credit because they normally involve less than four scheduled repayments. Money is often in the consumer’s bank account the same day, without the benefit of the normal ‘cooling off’ period.”
Short Term Loans
Also in the US, the Protecting Consumers from Unreasonable Credit Rates Act of 2009 is before Congress. If signed into law it would have a dramatic impact on some lenders, allowing them to charge interest of only 36% on certain short-term loans.
There is a certain inevitability that if this legislation does pass into law, more US lending organisations will want to relocate to countries with less stringent financial regulations. In the UK, the Office of Fair Trading is due to report later in 2009 on a year long investigation into payday loans.
Payday loans
Of course it’s almost impossible for the average consumer to know whether a company offering payday and other short term cash loans is from outside the United Kingdom or not although an occasional word spelled in the American way may point to the company’s geographical origins.
A trawl through a few of the nine million results that a Google “payday loans” search generates, immediately highlights a number of concerns:
