Payday loans ‘being used too often as a debt solution’
Posted on Friday, 16th November, 2012
A new study has revealed that young people in the UK are putting their finances at risk by using payday loans as a debt solution.
Business insolvency organisation R3 has published a survey showing that five million British adults are considering taking out a payday loan in the next six months, with 26 per cent of 18 to 24-year-olds likely to use this form of finance.
However, in many cases problems are being caused by the fact that many are going into debt by doing so, meaning they often have difficulty paying them back – which often leads to a destructive and inescapable cycle of borrowing.
In the past six months, 13 per cent of the British population have had to prioritise paying back their payday loans rather than purchasing essentials such as food, clothes or utilities.
Part of this problem is the culture created by pervasive advertising of payday lenders and demographic shifts, which serving to encourage young people to turn to these high-interest forms of borrowing without properly thinking it through, thus backing them into difficult positions.
R3 council member Louise Brittain said: “We know from last year that one in three couldn’t pay off the first payday loan so had to take out another one – and now 12 per cent of 18 to 24-year-olds have prioritised paying back this debt over buying food in the past six months.”
She added that this shows these loans “aren’t doing their job and are in fact only exacerbating a difficult situation”.
A recent study by Which? suggested that as many as one-half of payday loan customers find they are unable to pay off their debt on time.
Such figures might persuade more people to investigate the benefits of logbook loans, which allow customers to arrange a loan period that suits them, which could be anywhere between 6 and 36 months.
Borrow in confidence with a cash logbook loan from Mobile Money. Visit www.mobilemoney.co.uk and get the service you would expect from the UK’s first logbook loan company.
Last modified: Thursday, 25th September, 2014
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