The StepChange debt charity has reported that twice as many people who sought help with debts in 2012 had payday loans compared with statistics from 2011. The charity helped 36,413 people in 2012 who had payday related loan debts, which was around 20,000 more than the previous year. The average debt owed by individuals was £1,657.The charity has warned that the low-paid and young were most likely to be caught up by payday loan debts, as typical payday lenders make loans of several hundred pounds for a matter of weeks, at interest rates that can work out at well over 1,000% on an annual basis. Delroy Cornaldi of StepChange said: “These findings are yet more evidence of the scourge of payday loans. With household finances increasingly under extreme pressure and access credit far less available, many face the unenviable choice of using payday loans simply to make ends meet.”
A recent review by the Office of Fair Trading found evidence of “widespread irresponsible lending” and has stimulated industry action with the largest 50 payday loan firms given 12 weeks to change their practices, or risk losing their licences. The payday loans industry have claimed that it is already making changes to the way it operates, including credit-checking all loan applications, and introducing a limit on the number of times a loan can be rolled over or extended.The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.Setfords Solicitors are a national full service law firm, with debt recovery solicitors in Guildford and across the country.