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Payday Loan and its Contribution to Our Day to Day Life

Payday Loan and its Contribution to Our Day to Day Life

A payday loan is something that everyone longs for, to get rid of the overdosage of the financial crisis. Let’s have an authentic discussion over the U.K market, how the citizens over there get rid of it and which sorts of companies are capable to help us out.

Payday loans were an American phenomenon and have emerged over the UK over the last 5 years.

They are advertised as a short-term lending solution which they are more than happy to point out on their daytime TV adverts. While they are intended as a short-term fix, the relative ease in which a consumer can obtain one has turned it into a massive long-term headache for British consumers.

The original purpose for Payday loans was to help towards vehicle repairs, paying off a larger than usual phone/utility bill, or to see you through your last week before that much-needed payday.

Now they have become a way of borrowing money to pay off other debts.

Consolidation of other payday loans:

The payday loan market has grown massively in the last 5 years as more and more people are struggling with unsecured debts and day-to-day living expenses. The interest charged on payday loans has also encouraged the growth of the market.

Current statistics show just how popular and easy to obtain high-interest payday loans are:

1) Each year 1.2 million people take out a payday loan in the UK.
2) A total of £1.2 billion is borrowed every year through payday loans.
3) People owe on average £1200 on payday loans.
4) People who have a payday loan usually have 4 on average.
5) 40% of people borrowing money on payday loans were using it for day-to-day living costs.
6) Most social demographics use payday loan companies such as pharmacists, teachers, and accountants.

*Source Consumer Credit Counseling Service:

The figures show that payday loans are now a massive problem for British consumers and poor money management is only going to lead to more people taking out a payday loan. The figures also show that it’s not just people on low incomes who need payday loans but people on higher salaries are also falling victim to the promise of quick money and crippling interest rates.

Interest rates:
As discussed above the interest rates on payday loans are the highest in the industry. This is justified by the lenders by stating it is only short-term lending. Short-term lending or not the interest rates are astronomical and once you take one out it is very hard to escape its clutches. There are currently no caps on payday loan interest rates so the companies are free to charge whatever they want.

Interest rate examples;
• Wonga – 4214%
• Payday UK – 1737%
• Kwik Cash – 1737%

These interest rates are fixed and represent a huge outlay of interest for consumers. The high-interest rates are the primary reason people struggle and are tempted to take out other payday loans to pay off the ones they already have.

Your options in tackling payday loan debt:

Most people realize they are struggling when their scheduled payment is due to leave their bank account. This usually leaves the consumer with no money to pay for day-to-day living expenses and drives the temptation to take out the payday loan again.

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