More And More People Living Off Pay Day Loans
As the credit crunch deepens and people are finding it increasingly hard to obtain a personal loan, or other finance through more conventional methods, such as a bank or building society, a large number of individuals are turning to desperate measures such as loan sharks and pay day loan companies, just to try and make ends meet each month.
According to Credit Action, more and more people are taking out cash loans which charge extremely high interest rates, often with large penalties for early repayment.
A recent study by Abbey has also shown that the average monthly disposable income for a person living in the UK has reduced by around 30 per cent and that somewhere in the region of ten per cent of individuals are currently spending 90 per cent of their salary each month just to keep up with their home owner loan repayments and other bills.
These are the people who are particularly vulnerable to this type of less ethical loan company and are often taken advantage of, with the prospect of cash now, without realising what the loan will actually cost them over a longer term.
Francis Walker, a spokesperson for Credit Action said that even pawn brokers were seeing a dramatic increase in business as people continue to fall on hard times and try to raise extra cash by whatever means possible, and warned potential borrowers against the “desperate” measures of entering into a loan agreement with a pay day loan company, or similar organisation who would be likely to charge high levels of interest, potentially making a small loan extremely expensive.
She advised people who might be considering this option to find out where their nearest credit union is located, as they will provide loans of a similar level, but at much reduced interest rates.
