As the payday loan industry continues to grow in the UK, so have the number of unsavoury stories regarding its practices of providing the needy with fast loans. With MPs labelling lenders as professional loan sharks and calling for their regulation, recent surveys and reports have indicated that the picture painted by MPs is, in fact, way off the mark.
A survey by uSwitch in August this year claimed that 49 per cent of payday loan customers described their experience with their lenders as ‘positive’. Another 30 per cent claimed that they would consider using the service again. These figures provide a more complex picture than the MPs would rather have you believe, it seems.
The problem seems to arise from the fact that the banks are too reluctant to lend to customers who do not have exemplary credit histories. The uSwitch survey tells us that 25% of British payday borrowers resorted to quick loans because their banks refused them. As a result, there has been a sharp rise in the number of those in need of quick cash injections to help deal with seemingly ever-rising living costs.
Living costs have risen 25 per cent over the last five years. Because of this, there are many who need to bridge the gap between the paying of bills and associated other costs between paydays. Payday loans help alleviate this problem: banks, on the other hand, haven’t offered any help at all in this area.
Irresponsible lending and borrowing
Another sad truth is that not all lenders are responsible in the way they conduct business. If you’re thinking of getting out a payday loan, you should make efforts to find out as much as you can about the lender before you commit.
There are plenty of irresponsible lenders that operate the market: these are the types that approve loans that they know very well the customer will not be able to pay back on time, getting them into deeper debt.
Finding a responsible lender
It’s on you to make sure that the lender you’ve chosen has a good reputation. Good lenders will always carefully consider all cases on an individual basis and will only approve the loan if they are confident of your ability to repay the loan on time without sliding into further debt.
This way, you’ll be able to spend the money and repay it on time without getting yourself mired in more debt. By being accessible and responsive to their clients, a good payday lender will help you avoid the pitfalls so you can borrow and return the money without trouble.
Nothing is ever black-and-white and payday loans are no exception. With the right amount of research and attention, you’ll be able to put to bed any worries you may have had and safely take advantage of a service that very few institutions currently provide.