Soaring living costs have led middle-income earners to turn to payday loan providers to make ends meet.
These providers give loans to customers who run out of money to pay for their daily expenses, and will be paid back once their borrowers receive their next paycheck. On average, customers borrow £300, according to one leading firm, Instant Loans Direct.
To qualify, an applicant must first have a job and a bank account. Once successful, the money will be transferred to the customer’s account within minutes.
However, customers should be forewarned of its enormous rates if they pay late. These kinds of loans make big money through exorbitant fees, so paying on time is recommended to avoid any charges from rolling over to the next month. Payday loans must be paid back within a couple of days to a month.
Most of these customers are earning well above the average income, which is between £25,000 and £50,000, but, because of punishing costs in food, gas, electricity and petrol, customers are often cash strapped – leaving them with no other option but to seek help from payday loan providers.
Payday loan companies are certainly benefiting from the financial crisis, as the industry is growing. The business is estimated to have a £1.2billion value.
According to the Consumer Finance Association (CFA), people between the ages of 25 to 45, make up 70% of their clients, mostly single, and about a quarter are married.
Giles Scouts from Instant Loans Direct tells, that “It’s actually the middle-earners whose budgets are being bust and who need the cash most desperately to cover them, usually for ten days until payday.”