Millions expecting to have to take out payday loans

Millions expecting to have to take out payday loans

Millions of people in the UK are expecting to have to take out payday loans over the coming six months according to a recent report. These loans have been causing great concern due to the crippling levels of interest charged and the way in which they can lead to spiralling debt. However, in the current climate many vulnerable people are turning to them because they have no other option available because of restrictions on mainstream lending.

A survey has recently been carried out into consumers’ plans when it comes to payday loans and worrying it is claimed that around 3.5 million adults are considering taking out a payday loan over the coming six months. The survey showed that almost half of the population is now struggling to make it from one payday to the next, as consumers struggle with soaring living costs compared with frozen and in some cases even reduced income.

In the 25-44 year age group a massive 62 percent reported that they experienced problems on a regular basis prior to payday and compared to the same period last year the number of people running out of cash prior to getting paid has increased by 7 percent. Consumers are being warned against payday loans as some charged more than 4000 percent interest but for some consumers there is no other choice.

Consumer Affairs Minister Edward Davey said: ‘Payday loans should only ever be used as a short term financial fix, not as a long term solution to financial difficulties. People should think very carefully before taking out one of these loans and consider affordable alternatives such as their local Credit Union. We know there are particular concerns around payday loans and a real lack of transparency about how these loans work. That is why we have started discussions with the industry on ensuring that codes of practice contain real enhanced consumer protections and I have written to the main trade associations representing payday lenders to stress the importance of this work.’

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