According to a recent BBC article, payday loans are hitting people in UK just as hard as they are in the US. So popular are payday loans in the UK that they have increased 400% since 2009. Payday loans are relatively new in the UK and consumers are just starting to learn how they can get these short term loans. Unemployment is the biggest single driver of debt problems in the UK, and people who have lost their job after taking out extremely expensive payday loans are finding it particularly difficult to cope.
Of course, that doesn’t mean that everyone SHOULD get a payday loan. Payday loans are great for paying bills between paychecks, but if you know that you will be unemployed soon, you should NOT take out a payday loan. After all, how are you going to pay back the loan if you don’t have a paycheck anymore? Payday loans are like any other type of loan, you shouldn’t take the loan out if you truly have no way to pay it back. Common sense, right? Unfortunately, not so for everyone.
Many people harp on about how payday loans have no regulations, but payday loan lenders in the UK have just as stringent rules as they do in the US. To prove my point, payday lenders in the UK MUST check to make sure someone that wants a loan really does have a job and is thus able to repay it. With that said though, the Office of Fair Trading, which regulates the industry in the UK, said that lenders could offer payday loans to the unemployed. But the payday loan lenders in the UK, refuse to do so. Bravo!
No one can predict the future though, so if you do run into any problems repaying your payday loan, be sure to talk to your lender before you run into problems repaying your loan. Responsible lenders will always work with you to ensure your debt doesn’t spiral out of control. In fact, if you do reach out to your payday lender, they will typically freeze charges and interest for you, no later than 60 days after you stop making payments. You can also have the charges frozen as soon as you manage to agree an acceptable repayment plan.