It is expected that across the UK thousands of homes will be utilising payday loans to ensure that they can pay their bills and afford Christmas. These loans are likely to cause a great problem to those who take them out in 2012.
Financial advisers across the UK have said that people’s money is being stretched more than ever before in this Christmas period. Morrisons has stated that is many of their customers have already exhausted the disposable income by the end of the month and often they are then struggling to pay their fuel bills.
Therefore it is not such a shock to see why people need these loans. They allow people to make do until they get their paycheque cheque. The largest payday loan company in Europe is Ferratum and since that time over 2 million households are taken out a loan with the company.
The sales and marketing manager for the company in the UK has said, “In the financial services sector micro-loans are the fastest-growing area. They like the flexibility of being able to take out a small amount and pay it back quickly. The more time passes the more people are moving away from long-term loans from traditional lenders.”
The company prides itself on transparency and tells customers immediately how much they have to pay back and the risks involved. The company also limits the first-time loan to £100 so people can see what they’re getting involved with.
The problem with these payday loans is that many people take several of them out so they have more money. The interest rates become crippling very fast and people cannot pay back the debt.