Millions May Turn To Payday Loans in the Next 6 Months

It has been revealed today that R3 – a group of insolvency experts – have predicted that millions of British people are likely to take out a pay-day loan to get them through the month, over the next few months.

This comes after last month’s announcement by the Citizens Advice Bureau, warning that the number of people running into debt due to the use of payday loans has quadrupled in the last two years.

Those having to resort to these types of loans can face interest rates of up to 6000%.

With one lender, for every £100 that a borrower takes out, over a 30 day period, they will have to pay back £139.75, and with loans ranging from £80 - £800, this can quickly escalate to an unmanageable amount.

However, even with ridiculous rates like these on the market, an ever increasing amount of people are struggling to make ends meet between paydays, and are therefore forced to take out loans with such astounding rates.

The survey discovered that 45% of people questioned struggle to make it through to their payday without assistance, with this number rising to a massive 62% of people in the 26 44 year olds.

Despite the clear issues with some lenders, this method of tiding oneself over can be beneficial.

If the money owed is paid back promptly on the next payday, this method of borrowing can actually work out to be cheaper than an unauthorized overdraft or credit card charge.

However, John Lamidey, chief executive of the Consumer Finance Association, has disagreed with the findings of this report, saying: “only half of the population uses credit at all, so you’ve got to know that in half.”

Mr Lamidey went on to explain in greater detail just why he is skeptical of the information gathered, stating that R3 have “extrapolated from a very, very tiny sample,” and offering his own information on payday loans, saying that “94% of our customers are totally happy with the product that they’re getting.”

If you need a little bit of extra cash, or an easier way to pay for the things you need between pay days, you could try a personal loan or even a credit card which offers 0% on purchases.