The problem with ‘payday loans’
Over the last few years the cost of most essential items has risen significantly. With everything from groceries to petrol rising people have been forced to try and stretch their income further than ever before and further than it can go. Because of this a growing number of people are running out of money before the end of the month and are having to seek payday loans to get them through until they get paid. The problem is however that the companies offering these loans do so at high interest rates and let people use them over and over again.
Lenders are simply required to have a license which is in accordance with the 1974 Consumer Credit Act but once they have this, the limitations on lending are very minimal. People are becoming dependant on these loans and are starting to build debts. Upon doing this, the financial support they were looking for quickly becomes a real debt which they will have to pay back.
The problem with these loans is that people usually seek them because they don’t have enough money at the end of the month. They then have to pay this back on payday which leaves them with even less money for the following month. This then leaves them needing to borrow more at the end of the next month.
At the moment there are no regulations stopping people from borrowing from these lenders month after month. Lenders who allow people to do this are extremely irresponsible as they know that it is only going to worsen the person’s financial situation.
This type of lender has received a lot of attention recently and many authority figures have asked for changes in the regulations. It has been suggested that there should be a cap on how many times people can borrow within a given period so that they are not building a large debt. It has also been suggested that there should be more of an obligation on lenders to check the borrower’s financial situation in depth to stop those who aren’t suitable from borrowing.
Get more information on your debt management options if you’re struggling to pay your bills.
January 28, 2012 | Posted by Heather Austen
Categories:
Tags:

Recent Comments