Payday Loan - Strabane Weekly
The number of people running into debt through so-called payday loans is increasing, a local debt advisory service said yesterday (Tuesday).
Debt Action NI's Michael Lyttle said it was too easy obtain the small, short-term unsecured loans which are designed to tide people over until they get their salary, and he has joined calls for tighter regulation and affordability checks.
The Strabane-based adviser was speaking following the publication of a new report by the Citizens' Advice Bureau (CAB) which claimed that lenders were "out of control" and were "hounding" customers to repay the loans.
Mr Lyttle revealed that in the space of 10 months he had helped 24 clients with almost £19,000 worth of debt accrued through payday loans.
“Since August last year, we have dealt with a total of £18,899.90 in debt from 42 separate payday loans. So on average, that is working out at around £791 per person.
“A lot of the time it is vulnerable people who are on low incomes and feel that they have nowhere else to turn. However, there are people who are in full-time employment who are availing of them too because their outgoings are more than their earnings.
“This is not a status thing - it is right across the spectrum. I am seeing more people turning to the payday loans and they are people from all walks of life.
“People are turning to payday lenders in desperate times. Often I am told by clients that they have felt they had no other option and that they needed the loan to feed the kids or heat their homes. We would never judge anyone for taking them out, but people need to be aware of what they are signing up to," he said.
The debt advice adviser says most people are unaware of the dangers of payday loan facilities until they have taken them out.
Continued Michael: "Payday loans have such high interest rates and they are so easy to avail of that people just don't realise until months down the line what the full cost of paying them back actually is. Certainly, they are too easy to get, you can just walk off the street and half an hour later have one. Why won't they do credit checks?
“I do think that these companies need checked to see if they are complying with regulations. Also, there needs to strenuous affordability checks carried out on individuals to make sure that people can afford them.
“A payday loan may be a solution in the short-term for someone, but only if it is in the short-term. The problem arises when a client cannot afford to pay back the full amount at the end of the month. In that incident, I would say 'don't go near them'. Charges continue to accumulate over the long-term - especially if people 'roll over' until the next month and I would seriously warn against that.
“Feedback from all my clients who have debt associated with payday loans is the same - they all say that they regretted making that choice.
“More and more people are turning to these companies for loans, but payday loans in most cases only account for a small percentage of people's debt. Some are already struggling with repayments to other debts and they feel like these companies are the only help out there.
“It seems to be a vicious circle but I would hope that if they came to me for advice I would be able to help them. If someone is considering taking one of these loans then they need to realise exactly what it will mean for them and to ensure that ultimately it is only short term and can be paid back within one week or 10 days.
“However, I would also emphasise that if they are in financial difficulty that they would come and speak to me first of all to see if there are any other options available for them."
Mr Lyttle says "100 per cent of the time" he can help with payday loans as companies are willing to accept reduced payments following representation by the service.
“Debt brings so much stress and anxiety for people but once they contact ourselves people see that there is light at the end of the tunnel, that help is there and that they don't have to shoulder it on there own. Come to me and I will do all I can for you," he said.
Michael Lyttle can be contacted at the agency's office at 32-34 Bridge Street, Strabane, Tel (028)71884307 or 07578239978. Alternatively email: email@example.com