Payday loans in the United Kingdom have always been considered a convenient and an easy way to fall back on as a source of fast cash when there are cash emergencies until the next salary day. The payday loan industry in this country is relatively young and it emerged only a couple of decades ago, in the nineteen nineties. In comparison, the banking institutions started issuing loans as early as the nineteen thirties, about eight decades ago. There are brokers offering a complete scope of the market, allow borrowers to make only one applicaition and yet be able to compare the entire market. Find out more at https://www.badcreditsite.co.uk/payday-loans-for-bad-credit/
1) An average payday loan applicant would take out seven more loans in a year. Millions of people in the United Kingdom will use payday loans every year and an average borrower would take out eight loans, annually. The payday loan addiction is a very real one.
2) Statistics have shown that more than ten million loans were applied for in 2010 and 2011 alone. Several payday lender establishments have
clustered around the low to middle-income neighbourhoods. It has been found that residents in such neighbourhoods earn less than 1400 GBP every month and they are highly likely to seek short-term payday loans at least once a month.
3) A study has shown (PDF LINK) in UK that borrowers are spending close to 140% on interest charges on the actual amount of the loan. If they take out a payday loan of 500 GBP, they will end up paying around 700 GBP throughout the year. For every three out of five payday loans, the borrowers have ended up paying more in fees charged to them than the actual amount of the loan. Payday loans, when not handled judiciously, can make people fall into a stiff debt trap with a cycle that result in owing more in terms of interest charges and fees than the loan amount, to begin with.
For many people, a 500 GBP payday loan is sought after with living expenses which are variable between their pay cheques. On account of the high annual percentage rate and fees that are mounting by the day, an average borrower will pay more in fees than the original loan amount he or she receives. The annual percentage rate for the payday loans is averaging around 400% and higher. Payday loans are popular despite high interest rates for the simple reason that they are convenient to apply for. They can be applied for online and there is no credit check required. Borrowers with poor credit rating are also eligible for payday loans. The biggest attraction is that such applications are approved fast and applicants will receive their loan amount on the same day that they made out their application.
4) The average tenure of the loan is a fortnight and the finance charges for a payday loan for a two-week period may range from 390% to 780% on the annual percentage rate. It is a well known fact that payday loans are categorised as short-term loans and they will have interest rates attached to them. It has also been noted that users of payday loans in the United Kingdom are more likely than those people who do not opt for payday loans to file for bankruptcy.
5) Majority of payday loans are either renewed or rolled over –
Almost eighty per cent of payday loans in the United Kingdom are either renewed within a fortnight or rolled over. Despite rules laid out in favour of the borrowers by the Financial Conduct Authority, it has been found that majority of the payday loans have been made out to borrowers who have a habit of renewing their loans a number of times in a year. Only fifteen per cent of the borrowers end up repaying all their payday debts without borrowing again within the same month.