Google would have a huge profit by promoting payday loans at the top of its results pages. Some of the loans advertised in the United Kingdom have an insane interest of up to 1,575%. These loans are directed at British people who are in dire need of money and are usually already in a bad financial situation.
These companies offering loans with rip-off interest rates have paid Google to appear as the first result on the results pages.
If you live in the UK and google ‘loan,’ you will see GetMyLoans (which offers a 1,575% rate) at the top of the page. This company also guarantees that you will get the cash in as little as 10 minutes.
In addition, they offer £3,500 over a two-year period to people with ‘very bad credit’ and without actually checking their credit history, which is more than enough to realize that their only goal is to get people into a debt cycle.
When you search ‘payday loan’ on Google, you will get ads for LendingStream (1325% rate) and SwiftMoney (1255% rate). These companies also paid to get advertised and appear at the top of the pages.
But who would fall victim to such insane rates? Actually, millions of Brits do this each year only to make ends meet. Among them are National Health Service staff, people who work in supermarkets, council offers, etc.
The Sun, a well-known British newspaper, has launched a cap on the total price of high-interest loans advertised and sold to the financially endangered British people. In addition, UK Ministers have announced that they will direct £800,000 at fighting illegal lenders and promote cheaper alternatives to these rip-off loans.
Google has stated that it continually reviews its policies and makes sure they are effective. For this reason, they updated their policies in 2016 to prohibit ads for short-term personal loans.
If you live in the US, there is no need to worry about payday loans advertised this way. The US market is different from the UK because of the Financial Conduct Authority (FCA).
As a response to concerns raised by consumer advocates arguing that the lending industry exploits poor and financially vulnerable people, in July 2016, Google banned payday loan advertisements from their site. However, this banned only the ads for payday loans that demanded reimbursement within two months, the loan rates having remained unaffected by this decision.
That was the first time Google announced a global ban on ads for a broad category of financial products.
Still, since the ban related only to the reimbursement period, the loans with exorbitant rates got away, and they still appear as ads at the top of the results pages in the UK. Furthermore, even though consumers can’t find payday loans in the ads, they can find them in regular results by searching for them on Google.
People who opt for payday loans usually need money urgently. Payday loans are short-term loans that require no collateral and have a high APR (up to 400% in the US). Moreover, these lenders will give you cash without performing a credit check because they want to get you trapped in a debt cycle. This means that if you can’t pay back the full amount on the next payday (which most people can’t), they will only charge the rate and have you pay back the full amount again next month (both the loan and rate).
That is why we highly recommend you to stay away from payday loans, as there are much better options that you can find if looking for a loan. The lending market’s flexibility increases, which means that you can find great personal loans with much lower rates.
You can always borrow some money from a friend (or a few of them) or even ask your boss for a cash advance. Finally, you can get a cosigner or guarantor for your loan and avoid insane interest rates since the lender will consider their credit history instead of yours.