Payday loans: lasting effects for the mortgage borrower
Pay-day loan companies have had huge press over the last 12 months, no less than from their own doing - splashing millions on marketing and advertising promising instant cash when you "need it most". It's big business.
But with this comes a level of responsibility and many feel the smash and grab lending preys on those bad with money, and charging them astronomical rates for the convenience of quick cash, is immoral. They'd be great if not for the 3000% interest charges.
Payday lenders have come under fire, with tabloid headlines calling for their heads, premier league footballers refusing to play in a 'Wonga' sponsored shirts, and the FCA finally announcing the proposed introduction of tighter regulation and compliance on all short term click for cash type arrangements.
Lasting impact on credit history
What hasn't been publicised as much is the longer lasting effects having ever dabbled with pay-day borrowing can have on your future potential to borrow.
Mortgage underwriters hate them. Even lenders that are considered flexible and sympathetic to those with more colourful credit history - lenders that accept a whole manner of historical adverse credit, will flat decline any customer who had had a pay-day loan. Kensington building society currently accept applications from customers who have racked up huge defaults and CCJ's into the thousands, so long as they are 2 years old. They won't however, accept any customer who's had a pay-day loan in that time, regardless of how small or how promptly they were repaid.
When speaking to development managers and other market experts it's their understanding that any borrower willing to take emergency funds at extortionate rates paints the picture of someone that simply can't manage their finances - just the type of borrower mortgage lenders spend huge sums trying to avoid.
So, before you log into quick quid for this months spending money, think to the future and consider the impact it'll have on your home, not just the financial costs of a high rate quick fix.
To find out which lenders are ok with pay-day loans in your history, or for any other adverse credit borrowing, please get in touch with us below or call on 0800 304 7880.