It is 2020, and despite all of the bad press and publicity, payday loans are still as popular as ever. But why is there still such a demand for a loan that was once seen as “the gateway to debt”? Int he UK especially, living costs are on the rise whilst salaries have remained the same for a number of years.
In essence, the cost of living is now much more expensive, however this has not been replicated in the minimum wage, nor has there been any plans to increase the minimum wage to ensure that people who are earning less are able to survive in today’s society.
Payday loans have often been used as that extra bridge between monthly salaries, with the majority of individuals choosing to take out a payday loan in order to get through the month to their next pay cheque. This is without question a risky way of living but unfortunately many people do not have a second option.
London is the payday loans capital of the UK
London is the payday loans capital of the UK with over 35% of payday loan applications in the UK coming from the capital. London also has the highest cost of living throughout the UK, however more interestingly it also has the highest average salary by quite a large distance.
Financial charities put the rise in payday loans down to people needing help with budgeting.
Could it be that there is simply no alternative to a payday loans. Credit cards and overdrafts were long championed by a number of financial charities as a suitable alternative for Payday Loans, but the reality is, they are just as expensive. Overdrafts come with a daily charge and can be quite difficult to get out of once you are in it. Payday loans on the other hand can be repaid in just one monthly payment, with the direct lender.
Not only that, payday loans are extremely fast and easy to apply for, with the majority of payday loans being issued and transferred in just 15 minute.
UK Payday Loans lender luckyloans.co.uk released figures from October 2016 – October 2019 which shows an average of 1250 payday loan applications daily on their website. The figure has stayed relatively stable throughout a 4 year period and shows no signs of slowing down.
Despite the prediction by the government, banks and many other financial charities, payday loans are still seriously in demand, the idea that they will one day not be needed just proves to be another financial myth.
The majority of individuals use payday loans on a short term basis
The average length of a payday loan is just 14 days, this is because the majority of individuals who are actively turning to payday loans in order to cover their monthly bills ar repaying the entire loan on their next pay-cheque.
Payday loans were always intended to be a short term solution to a bigger problem, however it seems that once individuals get into a routine of using a payday loan to see them through to their next pay cheque, it is very hard to stop.