Recently the shadow housing minister, Grant Shapps commented it was ‘obscene' that some "pay-day loan" companies charge as much as 10,000% annual interest on their loans due to a lack of competition in the home credit market. He said this allowed companies "to prey on those saddled with debt and struggling with poor credit ratings".
Payday loans are short term loans for relatively small sums of money, often used by those that need some money to tide them over until payday comes around, and with household finances getting increasingly tighter more and more people may be relying on loans such as these to get by each month.
It's clearly the case that customers who do not pay attention to them can simply worsen their financial position and pay day loans must always be used with the utmost care. So always consider if there's any other way to get the funds you need in time and look for ways on how to save on your interest payments.
The Office of Fair Trading recently stated it will look more closely at payday loans. Debt campaigners and officials have said that the OFT should have taken greater action of regulation of payday loans and monitoring or practices and charges within the payday loan industry.
We view this as a sensible course of action in order to protect those most vulnerable.
Has anyone got any experience with Pay Day loans?
What's your view on this type of loan?
How else might people looking at Pay Day loans get a better deal?