Payday Loan Providers Continue to be Under Pressure

Payday Loan Providers Continue to be Under Pressure

The pressure on providers of payday loans is intensified. After a maximum interest rate, various fines, the AFM is now launching an advertising ban for these flash loans.

Small amount, short duration

Small amount, short duration

A payday loan or flash credit is a loan for a small amount (borrowing up to € 1000) with a short term (up to 45 days). The loan can also be taken out quickly without a credit check test. In this way, vulnerable consumers in particular are tempted to take out a loan.

This has been an issue for the Financial Markets Authority for years. They warn of the high risks if consumers are in need of a loan anyway, because of a lack of money. payday loans are also often charged with high costs.

payday loans under pressure

Mini loans under pressure

To protect consumers, the AFM set a maximum interest rate for a payday loan at 14% last year. This is still well above the regular interest rate for borrowing money. Research by Good Finance showed that, in addition to high interest rates, payday loans also charged (hidden) costs. A number of providers were subsequently fined by the AFM.

Advertising ban for payday loans

Advertising ban for mini loans

The regulator is now going one step further with an advertising ban. payday loan providers are no longer allowed to advertise, for example via newspapers, billboards and online advertisements. The websites on which these flash credits are offered may only contain factual information.

The effect of the advertising ban for payday loans is not yet known. For example, when is a text promotional and when is it actually? For example, how do you rate frequently used cries such as 'Online borrowing 24/7', 'Fast and easy' and 'Borrowing without hassle' ? And may providers make an effort for a high position in Google? We are curious how the AFM will properly assess and enforce this.

Protecting consumers

Protecting consumers

The advertising ban for payday loans is an extension of a previous ban on advertising for risky investment products. With the current low interest rates on savings, consumers can be tempted to take out high-risk products, such as binary options, warrants, turbos and futures. These products can lead to large losses and also have high costs. Read more about different investment products.

In the coming years, the AFM will strictly monitor foreign parties that offer risky products. In a market with low-interest rates and easy online access, these parties are a spearhead for the regulator.

Don't pay too much! View our selection of small loan amounts below:

  • Borrow 1500 euros
  • 2000 euros
  • 2500 euros to borrow

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