Tag Archives: payday loan debt

UK Workforce Turning To Payday Loans, According to Unite

UK Workforce Turning To Payday Loans, According to UniteAccording 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.

Payday Loan Debt – How To Deal With It

Payday Loan Debt - How To Deal With It

Payday Loan Debt – How To Deal With It

Whilst payday loans can be a great way of helping you meet unexpected bills or helping to cover unforseen emergency costs over the course of the month, as well as a very convenient, quick way of getting a short term loan, there is always the risk of getting into debt easily, especially with the high interest rates associated with payday loans.

But what can you do if you do get into payday loan debt? Check out our top tips:

1. Work out a payment plan with your payday lender. Believe it or not payday loan companies do not want you to get in trouble with debt – it looks bad for them and it’s not so great for you. Most compliant payday lenders will work out a reduced repayment plan to help you meet monthly costs. This is what’s known as a “deferral” in the payday loan business.

2. Work out your monthly budget. Try to work out what your monthly outgoings are (i.e. utility bills, food costs, travel costs, etc), excluding your payday loan debt. Then simply subtract your outgoings from the overall amount you take in every month. That leaves you with a pot of money that you can dip into to repay debt – but remember you should only pay back what you can afford.

3. Cut out those things you don’t need. It’s easy really – by cutting out things like that weekly take-away, that 4 pack of beer or other luxuries, you will have more left over at the end of the month. More money that can go towards repaying your payday loan debt.

Remember – never ignore your debt thinking it will just go away. That’s not going to happen. If you’re struggling with payday loan debt then you need to face it head-on and resolve it as quickly as you can.

In addition to this you should avoid borrowing any more money until your existing debt is repayed. That doesn’t just include payday loans but should also include bank overdrafts, credit cards, unsecured loans and other forms of credit.

If you do end up taking out additional loans or borrowing money on your credit card you could end up with debt that is simply unmanageable. In which case it is important that you seek the guidance of a debt consolidation expert. If you are looking for debt consolidation services then you should look to the likes of a debt management plan to help you out.

Don’t Let Your Payday Loan Debt Grow

British consumers turning to payday loan companies for a quick finance fix are being warned to repay the money on time or risk facing high interest repayments.

According to insolvency professional trade body, R3, over 2 million people have turned to payday lenders such as Payday UK and Wonga over the past year. Many customers are drawn to the convenience of borrowing relatively small amounts (between £80 – £1,000) and, in some instances, the payday loan can be in the customer’s bank account within 24 hours.

Whilst borrowing a payday loan can prove cheaper than accessing an unauthorised bank overdraft the interest can accumulate quickly if the money isn’t repaid on time.

For example, Wonga have suggested that a standard payday loan of £100 could result in a repayment value of £187 if no repayments were made for 2 months or more. If the customer continues to default the debt is usually handed to a debt collection agency who will add on admin fees as well – driving up repayment costs further still.

One finance expert commented:

“There is a real danger that customers could fall into a spiral of debt where they have to take out a loan each month just to make ends meets. The golden rule is not to borrow money unless it is absolutely necessary.”