Consumers across Scotland are being urged not to let their financial situation deteriorate drastically through an overreliance on debt this Christmas.
The recently-established consumer advisory service consumeradvice.scot is particularly keen to see people thinking carefully about how they use payday loans over the upcoming festive period.
Among a variety of other budgeting tips, the advisory service urges potential borrowers to look closely at the details of how much a payday loan might cost them in interest over the course of a full year before they commit to taking on any such loan arrangement.
Backed by funding from the Scottish Government, consumeradvice.scot is run by the charity Advice Direct Scotland and its representatives are keen to deter Scots from finding themselves starting off the new year with a major financial hangover.
“Christmas is just around the corner, and with that, many of us are tempted - or forced - to overspend and overstretch our finances,” said the organisation’s knowledge coordinator Colin Mathieson.
“Banks often have strict guidelines on who can borrow, taking into account their ability to repay, so the alternative for many is to reach out to easier-to-obtain payday loans, with higher rates of interest, resulting in a much larger long-term repayment.
“This can cause those already in debt to become even deeper embroiled in the cycle of further high interest, borrowing to meet loan repayments, and other monthly commitments.”
The Financial Conduct Authority, which regulates all that goes on within the UK’s banking and consumer finance markets, has been clamping down on the most harmful practices identified as taking place among payday loan companies in recent years.
As a result of this clampdown, consumers have been better protected against the most excessive charges levied in relation to payday loans and some of the companies behind these types of loans have since found themselves heading out of business.
Advice Direct Scotland is emphasising the importance of individual borrowers knowing their rights as consumers if they do use payday loans and urging people to be aware that they might sometimes be able to claim compensation for being overcharged in relation to those loans.
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