Payday loans 'can lead to significant financial difficulties'

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www.moneynews.co.uk > Debt > Payday loans 'can lead to significant financial difficulties'

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Payday loans 'can lead to significant financial difficulties'

Taking out payday loans and failing to pay back this form of borrowing on time can quickly result in individuals falling into serious difficulties in terms of debt, it has been stated.

Paul Crayston, media officer at the Money Advice Trust, said anyone looking to borrow money should always be wary of payday lenders, as the speed at which these firms lend money means the credit check system is often disregarded.

He noted that this means the likelihood these lenders will be a higher credit risk is vastly increased and this is why the levels of annual interest on this form of borrowing are so extraordinarily high.

Mr Crayston added: "No one takes a payday loan out of choice, they take it because they're forced to or are unaware of other alternatives."

According to the Precious Plastic 2012 report from PricewaterhouseCoopers, credit cards have lost market share to other payment types over recent months - most notably debit cards, which grew by ten per cent in 2011.

However, a growing section of society is also turning to payday loans for short-term borrowing, with more prosperous individuals considering these deals as an alternative to credit cards.

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