But it seemed like a good idea at the time – Payday Loans

Mariska B, a 27 year old waitress and former swimmer decided to go swimming in the Limpopo River on the 1st of January 2010. It was a short New Year for Mariska.

Most residents of Phalaborwa know that “you don’t even dip a toe in the river, it is teeming with crocodiles and hippos,” but the day was hot and Mariska decided to cool off…well I guess it seemed like a good idea at the time.

Payday Loans are similar. Many people who take out payday loans have cash flow problems and have exhausted cheaper forms of credit. The loans are well advertised, easy to apply for and the funds are quickly received.

Half of those who take out payday loans are unable to pay them back and are forced to roll over their loans, often at a very high interest rate. 4% of Britons take out a payday loan each month and of these 40% use the loan to pay for essentials like fuel or food.

A recent survey has found that up to half of Payday Lenders’ revenues came from the extra interest and charges where the borrower cannot afford to pay back the borrowed capital.

Payday Lenders have used their profits to create adverts that show the loans as a short term cure for when your month is too long for your pay cheque. However, ALL credit must be repaid, even those with an annual interest rate of 5,800%.

If you save £100 for 1 year at the current interest rate of 0.5%, you would expect to receive around £102, if you borrowed £100 from a payday lender and didn’t repay it for a year, after a year you would have to repay £5,930.

Desperate people will naturally grab the easiest solution which often seems like a good idea at the time. Payday Loans are directly marketed to fill this gap.

My advice is that inaction is no action, if you are considering borrowing or have borrowed money from a payday lender, seek independent professional advice as soon as possible! Every day that you wait will cost you a packet!