Tens of thousands of people still need help with settling payday loans. These are still being widely marketed and used by many customers, to no ill effect no doubt, but some may be finding the short term borrowing solutions are not meeting their longer term finance needs.
The StepChange debt charity has reported that between January and June of this year, close to 44,000 (43,716) people came to them for help with their short-term borrowing, compared to just over 30,000 (30,762) in the same period last year - a very significant 42 per cent jump.
In total, the amount of payday loan debt dealt with by the charity swelled to £72.2 million this year, spread over 123,000 (123,159) individual loans. By comparison, in the first half of 2013, StepChange handled £51.2 million of debt across 95,000 (95,435) loans.
Commenting on the figures, the charity`s chief executive Mike O`Connor notes that `the payday market all too often fails to treat customers fairly, especially those in financial difficulty`.
If you cannot get yourself out of cash flow problems with the help of family, friends, self budgeting or savings you may consider looking at refinancing your loans with with a debt consolidation loan, which can consolidate your short term loans and leave you with a single repayment to make each month. You`ll take longer to pay back what you owe but each instalment will be for a smaller amount that you pay now.
As a result, interest will continue for a longer period and may well add up to a larger total paid, so always borrow over the shortest time you can afford to so you don`t have too much to pay more in interest on the refinancing loan than you need to. If you look at consolidating your credit through us, we will aim to provide you with the facts and figures via a free quote so you can decide whether to go ahead or not.
Find out more about debt consolidation loans by visiting firstchoicefinance.co.uk or calling on 0800 298 3000 or 0333 003 1505 if on your mobile.
While you can look into better budgeting or debt consolidation loans now, StepChange has a few suggestions that could make the payday loan market fairer for consumers. These include looking at the 100 per cent total cost cap and ensuring that lenders don`t let debts reach that cap in the first place, where possible.
The charity also mentions instigating a real time database so a borrower`s situation can be kept track of, while fees should be brought in line with other similar sectors , as it stands, for example there`s a £15 fixed default charge for some payday loans, but only £12 for credit cards.
Concern about debts building up was highlighted in another report from StepChange which investigated child poverty in the UK. Conducted alongside the Children`s Society, the study found that families in Wales were the worst off, with about one in four (23 per cent) being in debt.
In all, the organisations indicated that there are more than two million (2.14 million) children affected by problem debt, which amounts to over £4 billion across the country.
Matthew Reed is the chief executive of the Children`s Society and he warns that `we are in danger of ignoring the impact [that debt] is having on children now and in the future`. He adds that `with little savings to fall back on, it can take just one unexpected setback… ..to tip a family over the edge and into a debt trap that can feel impossible to escape from`.
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