Sunday, September 15, 2013
The UK payday loan market is a free for-all as lenders are able to charge extortionate rates without harsher industry regulations. A damning debt management report from the Business, Innovation and Skills Committee (BISC) raised concerns over the wild west' playing field for payday loan lenders. The controversial loans have left millions in a debt hell' as many struggle to make the high interest repayments and are at risk of spiraling further into debt. For the worst hit victims of payday loans, their huge debt problems have seen their homes repossessed. The MP's report revealed the shocking ways in which payday loans have affected people's lives. The manager of one debt solution firm reported that he had seen cases where people had an excess of 20 payday loans. The loans are typically designed to offer consumers a financial crutch until their next payday; however, consumers are left crippled by the sky-high interest rates of up to 16,000%. One personal finance expert, Martin Lewis from Moneysavingexpert, told BISC that the payday loan market in the UK was "A crock of gold at the end of the rainbow." This is because such payday lenders "have been shut down all over the world." He claimed that the problem is "only going to get worse unless there is some form of radical and quick intervention." Recently, the Office of Fair Trading revoked the license of one payday firm, Yes Loans, for poor practices. Sarah Brooks, Director of Financial Services at Consumer Focus, commented: We must not tolerate companies who use misleading sales practices to leech more money from cash-strapped consumers. The OFT has sent a very welcome message - that firms have to treat their customers fairly from the start." Whilst the OFT and the government are taking action against payday lenders, a number of cash-strapped Brits are still turning to them for quick fixes to their debt problems.
Posted by michelee ace at 6:15 AM