Many turning to payday loans to boost finances

In the past many people that were struggling with finances and wanted to give themselves a little financial boost often applied for a credit card or in some cases a personal loan. However, the global credit crunch has seen credit conditions become far tighter, and many are now unable to get their hands on financial solutions such as these.

A recent report has shown that many people who now struggle to get finance from a traditional lender are now turning to payday lenders in order to get a shorter term cash injection. These loans are offered for a short period, usually thirty days, and are usually for amounts up to around £1000 subject to income and outgoings.

There is no credit check carried out with payday loans, which may be partly why they seem to be increasing in popularity at a time when lenders are cutting back on offering traditional lines of credit to those with damaged credit. Since September of last year take up in payday loans has gone up by around 55%.

However, one industry professional warned that the need to take out such loans may indicate more serious financial issues. He said: “Are you paying out more than you get in each month? If you are, then you need debt advice, to see where you can make cutbacks. You may need to negotiate smaller payments with your creditors…or your mortgage lender.”