Payday loans total £1.2b per year in the UK!
According to latest reports, more and more people are turning to pay day loans as they run out of money towards the end of the month. A report by Consumer Focus the number of people taking out pay day loans has quadrupled in the last 14 years, this is despite some companies charging up to 30% Interest on a month long loan, making up to 2,000% APR one major chain is charging £9.99 for a £90.01 loan that is all repaid within 30 days. The APR on this deal is typically 260.2%.
'Payday loans are a valid form of credit and it's much better for people to take one out rather than go to a loan shark," said Sarah Brooks, head of financial services at Consumer Focus.
"But we do think there needs to be a limit on the number of loans people take out and how many loans they are able to roll over." In 2008 a young mother told the all too common story that she took out a payday loan from a pay day loan shop on her local high street after her wages fell, following a period of sick leave from work. She did not have enough in her bank account when the payday loan company cashed her post-dated cheques, and as a result she ended up paying more in bank charges than the amount she had originally borrowed and struggled to pay back her debts.
Debt Management
The payday loan industry says that when managed properly, a payday loan can be better value for money and easier to understand than taking out an unauthorised loan, or credit card charges, and safer than getting cash from a loan shark. This is all well and good if you pay back your debt quickly, however if you let the debt run then the costs can spiral out of control and you may very quickly find yourself in serious debt problems.
''There is a reluctance among many consumers to take on long term loans from traditional lenders, because they feel their financial situation could change," said John Lamidy from the Consumer Finance Association. "But they find that the short term credit offered by the pay day loans industry does meet their needs. Many people then take out more loans to pay off these debts and they can find themselves in deeper and deeper trouble if they don't contact a reputable debt management company to consolidate their debts and sensibly pay off their creditors.
If you are worried about your debt levels then please contact us using the form on the left, or alternatively call us freephone 0800 988 7701 and one of our debt management team will arrange a face to face visit with one of our expert debt advisors to help you find the best solution to your debt problems.
