Pay Day Loans

Providers of pay day loans could face increased scrutiny. Debt advice groups are calling for urgent action over payday loans that charge extremely high interest rates. They want the market regulator to make lenders behave responsibly, as some companies have lent money at a rate equivalent to almost 2,000% annually.

Payday loans typically involve a lender advancing a customer cash, usually for a month, against a post-dated cheque.

The Office of Fair Trading (OFT) said they would be covered by investigations of the issue of responsible lending.

Although the loans, often used by people to tide themselves over until they get their wages, generally attract high rates of interest, the businesses offering them are properly licensed and they say they are professional and responsible.

Many loan shops are owned by American companies, and hundreds have opened in the UK after some state authorities capped the rates they could charge in the US.

A Payday loan should in our opinion at Debt-2-go, A last resort and be considered only in emergencies. A sensible approach would be to apply for an IVA or a Debt Management Plan so as you would have more surplus cash at the end of the month.