In the past year the volume of persons contacting national debtline with concerns regarding payday loans has increased by almost 100% during 2012, many consumers have reported taking short duration loans with excessive charges even when bankrupt and having missed payments.
National debtline which acts as a free debt advice service in the UK reported that they received 20,013 calls related to payday loans over 1 year, statistics show that many persons had in excess of 10 outstanding payday loans and some had taken up to 80 payday loans over a short duration.
This is a massive jump in complaints concerning payday loans from 2007 to present, originally in 2007 only 465 complaints were received during the course of a year, during 2012 this number jumped to in excess of 100 per day.
The large increase in complaints and consumers taking payday loans represents the rapid increase in the availability of payday loans, further empathising the struggle with household bills and day to day costs being out of our control for many consumers. With the majority of payday lenders such as payday express , wonga, quickquid and who are amongst the UK’s industry leaders chargine apr’s in the 1000â€²s it is easily understandable how the costs can quickly spiral out of control.
Many lenders are disputing the usage of the interest rates term “apr” (annual percentage rate) speculating that it is not an ideal term to represent the costs incurred when taking a payday loan as they are designed to be taken over a month, not a year.
With current trends continuing as they are currently we are seeing an ever increasing volume of calls being received by Debtline who took a call for payday loan related help every seven minutes approximately.
“When payday loans were first introduced they were designed to be useful for a small proportion of persons in a sticky situation and this is something that they continue to attribute however we see thousands who have lent money in the past year who have taken a loan when it was obviously not the correct choice for them,” advised Joanna Elson, head executive of Money Advice Trust who operate National Debtline.
“Taking payday loans to this volume has major negative effects if not regulated efficiently, such advice is given by National Debtline who continue to battle against excessive burden of payday loan orientated complaints.”
Mrs Elson further commented that it’s not “responsible practice” when lenders boast about funding cash into an applicant’s account within as little as 10 minutes of them making an application, this sort of marketing and the lending decisions should not be taken so lightly.
Debtline have seen “endless examples” where guidelines for responsible lending regulations were ignored and in circumstances where payments were regrettably missed, lenders were hard to negotiate payment plans that were affordable for consumers.
In certain circumstances Elson has been forced to contact the OFT to make officials complaints and promote the suspension of certain lenders CCL’s with instant effect in situations where consistent breaches of regulations are encountered by certain lenders.
Editor: Ceri Thomas
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