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Tuesday 24th of August 2010

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August 16, 2010

Payday loan number quadruple

by Gill Montia

Story link: Payday loan number quadruple

The number of Britons taking out payday loans has quadrupled over the last four years, with 1.2 million people now borrowing a combined £1.2 billion, Consumer Focus has reported.

With a typical payday loan costing £20 for every £100 borrowed, the danger for consumers comes when a borrower can’t repay their loan within a month, or takes out multiple loans, as charges can quickly escalate.

The market is still developing in the UK and in a report entitled “Keep the Plates Spinning”, the watchdog is urging a precautionary approach from industry and regulators, to stop borrowers becoming dependent on this form of high interest credit.

However, Consumer Focus believes reform of the market is needed rather than an outright ban, which could push people into using illegal loan sharks.

Other key findings from the new research show that in 2009, the average size of a payday loan was an estimated £294; an estimated two thirds of payday loan borrowers have a household income of less than £25,000 and that payday loan users tend to be young and single.

 

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