The demand for Payday loans increases
New research from Moneysupermarket.com reveals that more and more people are taking out short term payday loans to tide them over when their monthly finances are stretched to the limit. Since September last year Moneysupermarket.com say that there has been a 55 per cent increase in the number of paydays loans taken out.
Payday loans are short term but expensive loans. For example if you needed an extra £80 one month becuase your car had broken down, you could look into getting a payday loan to tide you over. Typical APR’s on a payday payday loan are around 25 per cent so you’d have to pay back £100 if you borrowed £80. The term of a payday loan is only 30 days so you need to ensure you can afford to pay the money back quickly.
Given the high APR involved with this kind of loan, a 55 per cent increase over such a short period of time is staggering. It shows the increase in living costs is stretching families on a tight budget.
Head of loans at Moneysupermarket.com Tim Moss, said: “The rise in payday loans is astronomical and symbolises just how difficult people are finding it to cope day to day. As disposable income is being squeezed through increases in the cost of food, fuel, utilities and general living necessities, these loans are increasingly used to help those on a tight budget.
“Payday loans can be useful as a short-term credit vehicle. They are a bit like taxis -convenient for short journeys, but if you are going a long way, there are much cheaper ways to travel.
“They should only be taken out when it’s absolutely necessary and you are sure you can pay it back quickly. Anyone looking for longer term credit or unable to pay off the debt immediately, should steer clear of them. It would be wiser to borrow the cash from family or friends or arrange an authorised overdraft with your bank.”
Probably the best thing to do is review your finances and see how your money is spent every month, there may be ways to cut unneccessary spending and save money for those unexpected financial emergencies.
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