The Growth of Payday Loan Lenders in the UK
Over the past few years, the idea of “cash ‘til payday” loans has become something that many people have considered. Unfortunately, it has received much criticism in the media and from other financial institutions, accused of preying on those who can’t afford to take out regular loans to finance their lifestyle. In reality though, there are a number of different reasons why the industry has grown over the years and also a number of different advantages to taking out a loan of this type…
Why has this Industry Grown so Quickly?
It is no surprise that this type of loan has come to prominence at a time when other lending institutions – such as banks and building societies – have stopped making money readily available to those who need a quick injection to their finances. This has meant that those in financial need are having to resort to payday loan lenders for their money – something that provides a quick and simple route to getting them through the next month.
People are also inclined to use this service due to the ease in which they can obtain a loan, therefore meaning that they can have the money in their bank account within 24 hours. This can be vital for those who have unpaid bills to pay and therefore represents the best option for those in dire financial need. The higher interest rates are often far more preferable to getting bank fines or having different services – such as a phone or even electricity – cut off for not paying the bills.
Why do People Criticize the Industry?
Peoples’ main problem with payday loan lenders is that they are seen as preying on the less fortunate – offering ways in which they can get their hands on some money, but without fully explaining the large interest rates that are levied. Also, they are criticized for not doing enough background checks on people, therefore meaning that they are often seen as lending to people who are not suitable. This is a complex argument though, as who is really to blame – the lender or the person who has applied for the loan without first checking their ability to pay the money back?
What is this Type of Loan Used For?
Generally this type of loan is used for short term emergencies – with unpaid or pending bills being the most common of these. They ensure that the person suffers no short term problems while also giving them the chance to get their finances sorted and therefore prepare themselves for future months. They are generally not taken out for more luxury oriented purchases, such as cars and holidays, as the higher interest rates mean people only take them out when absolutely necessary.
Who are the Largest Providers?
The company that you have probably heard of more than any other is The Money Shop, who are a presence on most High Streets throughout the country. They offer a walk in service whereby the person is approved or declined for a loan almost instantaneously. There are other alternatives though, such as Payday Express, Payday Bank and Lending Stream, all of whom allow the applicant to apply online and get an almost instant decision. Make sure you check them all out before settling on one specific provider.