According to research undertaken by Unite increasing numbers of workers are turning to payday loans since their wages run out before month-end.
According to the report London-based workers are thought to borrow the large majority of payday loans for housing.
The report suggested that two fifths of workers who take out these short term loans use the money for a variety of things – including rent / mortgage, food and utility bills.
This raises concerns that if consumers are unable to meet the cost of living through wages it’s unlikely that they will be able to repay the payday loan effectively.
It should be noted that the ridiculously high APR attached to payday loans is not an accurate measurement of the interest repaid as it’s over a yearly period. However, whilst this may be the case it’s also worth bearing in mind that, if constantly deferred over a number of months, the levels of interest mounts up – leading to spiralling debt problems.
Whilst payday loans are clearly useful if you need a quick solution to help pay emergency bills they should only be used as a last resort or if you’re absolutely sure that you can meet repayments on your next payday. Otherwise it may be worth simply calling the company you owe money to to arrange a repayment plan. Whilst this may not appeal it is a safer way of controlling your debt than turning to a short term solution.
If you do need a quick solution then compare payday loans with Creditwindow.