Warning over payday loans
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Payplan has warned that customers approaching financial advisers for access to payday loans are more likely to need debt advice and budget planning.
Marketed as being a quick way of tiding financially stressed workers over until the end of the month, with credit of up to £750 available online or through the high street, payday loans have seen a marked increase in popularity during the recession.
But according to John Fairhurst, managing director at Payplan, more should be done to make people aware of the long term consequences of a payday loan.
He says: “A payday loan might appear to provide a quick and straightforward solution, but we often see people drawn into repeatedly taking out these expensive loans to try and keep up with unaffordable repayments to other creditors.
“Instead of improving their situation, people often find that use of these loans exacerbates an already serious debt problem.”
He adds: “I would strongly urge advisers to be careful dealing with clients who are looking for a quick fix to debt problems.
“At best, payday loans might seem to offer somecashflow advantages but advisers need to understand that requests for payday loans can, in many cases, hide an underlying debt problem where the best counsel they can give clients is to seek impartial debt advice rather than borrowing more money.”
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