Jump to content
House Price Crash Forum
Sign in to follow this  
dredwerker

Payday Loans

Recommended Posts

rest of more than 1,000 per cent to tide them over until they get paid. The number of so-called payday loans taken out by Britons has more than doubled in the past ten months as shoppers struggle to cover their monthly bills, figures calculated for The Times show.

The growing strain on consumers' wallets prompted by soaring fuel and food prices has caused a boom in business for lenders of short-term loans at high rates of interest. The number of deals taken out in the UK has risen by more than 130 per cent since last August, according to figures from Moneysupermarket, the price comparison website. These payday loans are already popular in the US and have been blamed for exacerbating the housing crisis there.

Payday lenders, such as Payday UK, Express Finance and Pounds Till Payday, offer loans of up to £1,000. Payday UK demands that £125 be repaid for a £100 loan, or £937.50 for a £700 loan. The loan is usually paid off within a couple of days, as soon as the borrower's wages are paid into their account.

Payday UK said that the typical annual percentage rate (APR) for its deals was 1,355 per cent. The typical rate for a credit card is 20 per cent, while a high street bank charges about 18 per cent on an overdraft.

Andy Clarke, retail director at Asda, the UK's second-biggest supermarket, said that signs of pre-payday financial strain at its tills were growing. Mr Clarke, who is chairman of the CBI's distributive trades panel, said: “In the week before payday, shoppers are buying a higher proportion of value products.”

Debt charities cautioned that these loans, which are available to people in full-time work earning more than £750 a month, often appealed to people who were in financial difficulties and could exacerbate their problems. Chris Tapp, of Credit Action, a debt charity, said: “Over the past year, payday loans have become an issue in the UK, and the growth in people who have problems who have such a loan has been notable in the last six months.”

Vince Cable, Treasury spokesman for the Liberal Democrats, said: “The growing popularity of these loans highlights the problems stemming from the credit crunch and unsustainable levels of personal debt in the UK.”

The growing strain on British shoppers was highlighted by the monthly CBI distributive trades survey, which showed that 9 per cent more retailers reported a fall rather than an increase in sales this month. This was an improvement on April and May, but the CBI gave warning that there were torrid times ahead for high street retailers. The findings are at odds with official data out last week that showed a 3.5 per cent surge in retail sales in May, powered by clothing sales. Analysts suggested that next month's official data would be much weaker.

Times LINK

Share this post


Link to post
Share on other sites

PS I know that people are doing this all the time but i think it must be a good indicator as per Vince Cable's quote:

Vince Cable, Treasury spokesman for the Liberal Democrats, said: “The growing popularity of these loans highlights the problems stemming from the credit crunch and unsustainable levels of personal debt in the UK.”

Share this post


Link to post
Share on other sites

The APR is irrelevant in short term lending.

If banks had to quote APR's for unauthorised overdraft fees then they average out at 2.5 million percent. Don't fall for the sensationalism.

Share this post


Link to post
Share on other sites

We must have had about a dozen of these exact same threads over a week.

As poster above says APR is irrelevant in short term loans. If I lend you a fiver and ask for £5.50 back tommorow the APR on that loan is astonishing.

Share this post


Link to post
Share on other sites
We must have had about a dozen of these exact same threads over a week.

As poster above says APR is irrelevant in short term loans. If I lend you a fiver and ask for £5.50 back tommorow the APR on that loan is astonishing.

You are right about the APR it is sensationalist.

The number of people doing it are up and still it is a quarter of a lot of peoples take home to get a short term loan that is loanshark territory surely.

based on

£937.50 for a £700 loan

Sorry if its been posted before - missed it.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.