Payday Loans Highlight Debt Problems Expert Claims
Payday Loans Highlight Debt Problems Expert Claims The growing trend among UK consumers to look for financial relief each month by applying for payday loans indicates that there are many Britons finding it difficult to make ends meet, according to National Debtline.
It warned that the increased number of payday loan applications - which was highlighted by a recent moneysupermarket study - was symptomatic of an underlying problem where people are finding that their outgoings regularly exceed their incomes. The national telephone helpline service advises consumers to set out a budget to help them manage their finances and reduce the strain that items of expenditure such as food and utility bills, mortgages and personal loan repayments are placing on households on a monthly basis.
According to the moneysupermarket study, the number of people opting to take out payday loans has increased by 55 per cent since September. The group attributed much of the growth in popularity to inflated demands on personal finances arising from recent energy price hikes and the increases in the average costs of food. Tim Moss, head of loans at the firm, said that the loans were proving a more attractive option than going into an unauthorised overdraft.
Commenting on the findings, Beccy Boden Wilks, spokesperson for National Debtline, said: "If you've run out of money [ahead of your next paycheque], so you feel that you need to use these sorts of services, then there's obviously a problem. Your outgoings are more than your income. So if somebody feels the need to use a payday loan on a regular basis, it's probably symptomatic of a serious underlying debt problem. So, you need to look at budgeting, or [ask] are your credit commitments too high, or have you overcommitted yourself with your mortgage."
She added that for those whose outgoings are exceeding their incomes, seeking independent financial advice may be a prudent option. In doing so, people might be able to identify areas where they can cut back on monthly spending and lessen their reliance on lending. She also advised that people may want to negotiate with their creditors to agree upon an extended payment period with a lower monthly contribution, while extending the length of a mortgage was also identified as a way to reduce the strain on finances. Ms Boden Wilks advised consumers who are struggling with meeting their monthly financial commitments to ask themselves whether their credit and mortgage responsibilities can realistically be met or whether it is time to approach providers to renegotiate the terms of lending.
Moneysupermarket's Tim Moss also noted that while payday loans were an effective short-term solution, people who were regularly struggling with monthly payments should sit down and evaluate their finances and identify areas where they can cut back on spending.
Elsewhere, residential property industry commentator the Council of Mortgage Lenders last month identified a growing trend among those looking to get on to the property ladder, with first-time buyers approaching their parents for a loan to cover the costs of a deposit as many mortgage providers withdraw 100 per cent lending packages.
About the Author:
Abbi Rouse writes for All About Loans. Our visitors can apply online for poor credit secured loans. We also specialise in payday loans, and the cheapest consolidation loans online. Visit today www.allaboutloans.co.uk/
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