Are you a student looking for a loan for some extra cash? Proceed carefully! Recently, the FCA has caught dishonest payday lenders offering fast payday loans for students at sky-high interest rates. Find out more about shady student payday lenders and shark loan busts from Quick Loans Express, a trusted direct lender.
In this day and age, it’s hard to be a student. Before getting their degree or securing a job, students are heavily in debt that will follow them for 30 years. We could point the finger at student loans and accuse them of charging high-interest rates that students can’t avoid. However, student loans are not entirely to blame. Many students struggle to afford basic living expenses and turn to student payday loans to cover essential bills and food. Unfortunately, loan sharks prey on students’ vulnerability and offer student pay day loans that are not regulated by the Financial Conduct Authority.
The Crushing Weight of Payday Loans for Students
You may have heard about Naseeb Chuhan, a 21-year-old student who committed suicide after his debts spiralled out of control. He felt suffocated by the crushing student payday loan debt he owed. Unfortunately, he had taken out loans with dishonest lenders who were charging him 1200% interest. His bereaved father spoke out strongly against these destructive student payday loans that drove his son to commit suicide.
Unfortunately, Naseeb Chuhan is not the first student to suffer from debt problems. Many students rely on short term loans or bridging loans when their expenditure exceeds their student loan income. However, dishonest lenders who offer payday loans for students are dangerous and are breaking regulation. Most mainstream payday lenders won’t lend to students without a steady income who are vulnerable to sink deeply into debt.
Initially, the allure of instant payday cash can be tempting, especially to a student strapped for cash. However, if you get into a consistent pattern of borrowing, it can cause serious money problems and become a weighty issue.
Student Payday Loan Lenders Caught!
Simple Payday, a credit broker, has been fined £250,000 for breaking FCA regulations. They promised ‘bridging loans’ up to £1000 in under an hour to students with interest rates starting at 1,192%. They promised ‘ bridging loans’ of up to £1000 in less than an hour to students, but their interest rates started at 1,192%.
This is not the first time that CEO Davit Gasparyan has been called out for not following regulations. The US Consumer Financial Protection Bureau fined him £71,000 for keeping borrowers in the dark about payday loan risks. He has been fined a further £179,000 for another of his companies for reselling private, sensitive information without permission.
Unfortunately, Mr Gasparyan is not the only shady businessman in the payday loan industry. Before applying for any payday loan, you must make sure the lender is FCA regulated and the interest is not too high! If you cannot afford a payday loan, you may need to consider other safe ways to borrow money. If you feel your finances are spiralling out of control, you should contact a debt specialist. They can advise you personally on how to handle your debt, budget, and save money.
Why Do Some Lenders Target Students?
In general, mainstream payday lenders will not offer loans for students, while their shady counterparts will. Most students have very minimal income if any and often cannot afford payday loans. Despite this, dishonest lenders will offer loans for students even if they can not afford to make the repayments. Payday loan regulations are there for a reason and should not further student debt.
Credit checks and affordability assessments are basic screening processes for loan applicants to ensure they can repay responsibly. With such protections in place, students using payday loans should be rare. Unfortunately, it is not. 25-year-old university student Kerri acknowledges she has student friends who survive on payday loans. She claims they are forever losing money on the interest and are stuck in a real cycle of debt.
Students, universities, and debt charities point out that payday loans are especially attractive to students because of their speed and easy accessibility. As one Brunel University graduate said, “ I would log in and have the money available in less than half an hour.” Dishonest lenders play on this vulnerability to attract students as loan customers.
Why are So Many Students in Debt?
Students can get up to £9,000 in student loans for tuition and £5,555 (£7,751 – London Students) for living costs. Based on a three-year study, a student can accumulate £43,665 of debt just from student loans. If students take out payday loans as well, they will fall into deep debt which will take years to pay.
To compound the issue, there are minimal opportunities for students to earn money in university. Although students try to find small jobs to cover their expenses, it’s hard to fit in work with their classes.
On the other hand, many students are guilty of overspending and living beyond their means. Since student loans are available to anyone who applies, they start off with the false illusion of “easy money“. The real problem begins, however, when their student loan funds run out. That’s when students either cut down significantly on their spending or turn to payday loans to maintain their extravagant lifestyle.
Despite student loan rates soaring, most students will still use them to pay for university. This is still not enough for some, and they may seek payday loans to cover basics like food and bills. Dishonest payday loan lenders target students, charging abhorrent levels of interest on loans they could not afford to begin with. These shady lenders are now getting exposed and prosecuted by the regulatory boards for lending irresponsibly to students.
Payday loans can be a helpful tool in an emergency, but only if used responsibly. Quick Loans Express encourages you to do your research before taking a loan to ensure you won’t fall prey to a loan shark.