Demand For Payday Loans On The Increaseposted on 26 October 2011 | posted in General Category | ( 0 ) CommentsThe rising cost of living has led to a 58% increase in demand for payday loans. A warning has been given to people considering to take out a payday loan to make sure the loan is the most suitable product for their circumstances and understand the terms and conditions before applying;otherwise they may find themselves in financial difficulty. Integrity have seen a big increase in the number of people coming to them for debt help with Payday loans recently with an approximate 58% increase in demand for payday loans in the UK and advisors have again re-iterated the need for people to check their personal budgets and if needed seek professional help before getting a Payday loan. Online searches for payday loans have doubled and it is estimated that 1 in 4 people will use a payday loan for living expenses and approx 44% of people who take out a payday loan will use it try and pay off existing debt. Payday loans are a form of short-term borrowing aimed at struggling consumers who need to bridge the gap until their next pay day. The amounts offered to consumers by payday loan companies usually range from GBP 100 to GBP 300, but this amount can go up to GBP 1,000 in some cases. If an application is successful, money can be transferred into the borrowers account on the same day, making them extremely attractive to those that need a quick cash injection. Due to their short terms nature pay day loans carry extremely high interest rates, some as much as 2,000 per cent when converted to an annual percentage rate (APR). These rates vary enormously, but typically, customers borrowing GBP 100 will have to pay back around GBP 125 and the term of the loan is usually set at 31 days - a GBP 300 loan is likely to cost them around GBP 375. Advisors at Integrity commented: "It's no surprise to see the demand for pay day loans rise so sharply in the current climate, and particularly around holiday periods when people have been spending more. These products act as a barometer, giving a unique insight into the state of the nation's finances, and as people continue to feel the pinch, we can expect to see the popularity of these products continue to increase. "When you convert the interest rate of a pay day loan to an APR, the costs involved can appear exorbitant, however, because of their short-termnature expressing the rate as an APR can be misleading. For consumers who need money quickly, it can often be cheaper to borrow using a payday loan than exceeding their overdraft limit without authorisation from their provider. "However, the use of payday loans comes with a huge caveat. There is a real danger that customers could fall into a spiral of debt where they have to take out a loan each month just to make ends meets. Borrowing GBP 100 one month means paying back GBP 125 the next and anyone struggling to stay out o fthe red could find that taking out a pay day loan ultimately makes the problem worse. Payday loans are not suitable for customers looking for longer term credit or unable to pay off the debt within a few days. "The golden rule for consumers is not to borrow money unless it is absolutely necessary. Consumers feeling the pinch need to sit down, got hrough their finances and try to work out where they can reduce their outgoings before considering any kind of loan. If you are a regular user of a payday loan, then you should really look at your circumstances. If you are in a position where you rely on them regularly, then we would advise seeking debt advice. "People using payday loans also need to look at the bigger picture of their finances and seek professional debt help and advice asap." Integrity Financial Services Limited are the UK's leading professional debt help and advice company, and if you have concerns about debt then call now on 01743 272900 Share this blog entry:
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