The cash is often emergency borrowing to pay an urgent unexpected bill, or rent or utility bills
Insolvency experts have predicted that more people who are short of money are going to turn to payday lenders – who can be found on the High Street and the internet – for a short-term loan.
Some debt charities and consumer groups have warned that such lenders can lure the unwary into taking on debt that balloons out of control.
An official study in 2010 said they provided a legitimate, useful, service that helped to cover a gap in the market.
And by the end of the year, the government said there was „growing evidence“ in support of a cap on the cost of a loan, including the fees and interest rates.
Typically someone will borrow a few hundred pounds from a payday loan firm for a short time, to tide them over until they receive their next wage or salary cheque.
In 2008, ВЈ900m was was taken out in the form of payday loans, according to the Office of Fair Trading in a formal review of all „high-cost“ credit businesses in 2010.
As a result of its most recent inquiries, which led to an interim report in , the OFT thinks that as much as ВЈ1.8bn a year may now be being lent by payday lenders.
The OFT found that the typical borrower of a payday loan was „more likely to be a young male, earning more than ВЈ1,000 monthly, and in rented accommodation. Many are unmarried with no children“.
The OFT said in that there were about 240 payday loan firms altogether in the UK, with the top 50 accounting for most of the lending.
Its previous research suggested there were about 2,000 High Street payday loan shops, some of which are part of large national chains, such as The Money Shop.
Across the whole consumer credit industry there are 72,000 lenders, the PAC says, but this includes credit card firms and door-to-door lenders. „The cash is often emergency borrowing to pay an urgent unexpected bill, or rent or utility bills“ weiterlesen
