Payday loans are not designed for long-term lending – the simple fact is if you cannot afford to repay the loan in full and on time, you could incur additional fees.
Manchester UK (PRWEB UK) 30 November 2013
In November 2013, BBC News ran an article about a recent report from the government backed Money Advice Service which revealed that nearly 9 million people in the UK are struggling with serious debt problems.
The report showed that areas mainly affected were in the North of England, particularly Hull, Manchester and Liverpool, with over 40% of each cities residence struggling with day-to-day issues of debt.
A particular concern highlighted in the report was that very few people seek help with their debt problems.
Caroline Rookes, chief executive of the Money Advice Service, said: “Millions of people could escape their spiral of debt by [seeking] advice. We know it transforms lives and the sooner people access it, the better – to take steps to improve their life for good.”
Shaz Sulaman from financial solutions specialists Baines & Ernst says, “We agree completely with Caroline Rookes – the sooner people seek help, the sooner they’ll be on a path towards a future free from debt.
“While facing up to the reality of your financial problems can be daunting, it’s important to realise that there is help available and that you don’t have to deal with debt alone. Bankruptcy is no longer the only option available – there are solutions that can help you lower repayments, freeze interest and charges and even write off debt. All it takes is one phone call to find out what help is available to you.”
However, with the pressure of Christmas looming over many households at the moment, the UK’s problem with debt won’t be declining anytime soon.
In fact, a separate report from the Money Advice Service – as featured on Sky news – highlighted the worrying trend of people turning towards payday lenders in the run up to Christmas, with 1.2 million people across the UK considering taking out a payday loan.
“Christmas stretches even the most stable of household budgets – therefore it’s understandable why people in financial difficulty may see a payday loan as an attractive solution over the festive period. Parents are under increased pressure to buy the very best gifts for their children and advertisements place so much emphasis on having a ‘perfect time’ which normally equates to spending huge sums of money on gifts, food, decorations and outfits for the party season.
“Payday loans are not designed for long-term lending – the simple fact is if you cannot afford to repay the loan in full and on time, you could incur additional fees. These costs can lead people to take out more loans to cover previous borrowings and this is how spiralling debt can occur,” adds Shaz Sulaman of Baines & Ernst.
The report from MAS also showed that 32% of those questioned were considering adding the cost of Christmas to their credit cards.
This may have been a manageable solution in the past, the rising cost of living now makes it harder for people to clear debts accumulated over the festive period, with 9% of those questioned for the Money Advice Survey still trying to repay last year’s Christmas debts.
“While people feel under pressure to afford Christmas, we would ask people to look at their finances and make sure they can afford the financial commitment that comes with taking out credit.
“If you are worried about your finances and are already struggling with debt, the best thing to do is avoid adding to your financial worries and get help. It would be much better to start the New Year off on a good financial footing rather than laden down with additional debts,” concludes Shaz Sulaman.