A new book on payday lending exposes how the looseness of the regulatory system in the UK has made the British high street a gold mine for the industry, leaving behind a trail of indebtedness as poor families pile debt upon debt to pay off various high interest lenders.
“‘Julieta’ took out a payday loan of £200 on Tuesday, and repaid the loan on Friday, plus £60 interest. Her pay packet was £290 after tax. So of course she didn’t have enough money left to last until next payday so she took another loan from the same payday company a few days later, also repaying it on the Friday with another £60 interest. Her bank statement showed her doing this every week for a month.”
Loan Sharks: The Rise and Rise of Payday Lending Searching Finance (2012) also claims that payday loans are not being used to “top-up an exuberant lifestyle, as some would have you believe”, but are rather being taken out to cover the basics. Just as many previously took out overdrafts and credit cards to stay afloat (or through the bargaining power of trade unions took on employers for better pay), today it is payday lenders – something akin to Robin Hood in reverse – who people increasingly go to as traditional sources of credit dry up.
“The payday lending industry has grown out of a failure by government and big banking institutions to accommodate for the rise in the cost of living, declining wages and basic credit facilities for those who need them,” author of Loan Sharks Carl Packman told me.
To read the full article goto: