The growing trend among UK consumers to look for financial
relief each month by applying for payday loans indicates
that there are many Britons finding it difficult to make
ends meet, according to National Debtline.
It warned that the increased number of payday loan
applications - which was highlighted by a recent
moneysupermarket study - was symptomatic of an underlying
problem where people are finding that their outgoings
regularly exceed their incomes. The national telephone
helpline service advises consumers to set out a budget to
help them manage their finances and reduce the strain that
items of expenditure such as food and utility bills,
mortgages and personal loan repayments are placing on
households on a monthly basis.
According to the moneysupermarket study, the number of
people opting to take out payday loans has increased by 55
per cent since September. The group attributed much of the
growth in popularity to inflated demands on personal
finances arising from recent energy price hikes and the
increases in the average costs of food. Tim Moss, head of
loans at the firm, said that the loans were proving a more
attractive option than going into an unauthorised overdraft.
Commenting on the findings, Beccy Boden Wilks, spokesperson
for National Debtline, said: "If you've run out of money
[ahead of your next paycheque], so you feel that you need
to use these sorts of services, then there's obviously a
problem. Your outgoings are more than your income. So if
somebody feels the need to use a payday loan on a regular
basis, it's probably symptomatic of a serious underlying
debt problem. So, you need to look at budgeting, or [ask]
are your credit commitments too high, or have you
overcommitted yourself with your mortgage."
She added that for those whose outgoings are exceeding
their incomes, seeking independent financial advice may be
a prudent option. In doing so, people might be able to
identify areas where they can cut back on monthly spending
and lessen their reliance on lending. She also advised that
people may want to negotiate with their creditors to agree
upon an extended payment period with a lower monthly
contribution, while extending the length of a mortgage was
also identified as a way to reduce the strain on finances.
Ms Boden Wilks advised consumers who are struggling with
meeting their monthly financial commitments to ask
themselves whether their credit and mortgage
responsibilities can realistically be met or whether it is
time to approach providers to renegotiate the terms of
lending.
Moneysupermarket's Tim Moss also noted that while payday
loans were an effective short-term solution, people who
were regularly struggling with monthly payments should sit
down and evaluate their finances and identify areas where
they can cut back on spending.
Elsewhere, residential property industry commentator the
Council of Mortgage Lenders last month identified a growing
trend among those looking to get on to the property ladder,
with first-time buyers approaching their parents for a loan
to cover the costs of a deposit as many mortgage providers
withdraw 100 per cent lending packages.
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Abbi Rouse writes for All About Loans. Our visitors can
apply online for poor credit secured loans. We also
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