We have all seen and heard the advertisements offering short terms loans to cover the shortfall that more and more people are seeing at the end of the month. There are now many of these high interest lenders in the UK.
Recent data published by the Association of Business Recovery Professional (R3) shows that, of those concerned about their level of debt, the rising cost of living when compared to relatively flat wage growth is becoming the main cause of personal debt problems, more so than loss of employment, one off non-essential payments or change in relationship status.
So where does that leave you if in one month you have taken out a payday loan? What happens next month? If in the first month the shortfall was caused by a one off event, then hopefully the loan will have been repaid and it’s back to life as normal. Obviously that’s how it’s supposed to work. But, if a payday loan has been taken out because the cost of living has overtaken your income then the likelihood of paying off the loan and making it to the end of the next month seems very slim indeed. From the above data it is shown that of those that have a payday loan 62% have prioritised paying it back over buying clothes and 46% ahead of buying food.
It is clear that for a number of people the cost of living has caught up to the extent that an end of month payday loan is a persistent factor in their lives and a difficult cycle to get away from.
These loans may be OK for some, one off, cases but should certainly not feature as anyone’s long term solution.
It is important that anybody with debt problems seeks professional advice.
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