Should there be caps on charges for payday loans?

Payday loans have become increasingly popular over recent years. This is not because they provide great value for money on borrowing or anything along those lines. The reasons for their popularity is clear – they are easily accessible for those that work because no credit check is required, they enable struggling consumers to get the money that they need pretty much right away, and they offer short term loans to tide people over until they get paid, which suits many of those that simply cannot make their monthly wages stretch quite far enough anymore.

The rise in the cost of living, the increase in VAT, cuts in wages, and potential job losses have all taken their toll on consumer finances, and this has left many people unable to make their budget stretch far enough to even afford the basics. Many of these people are turning to finance such as credit cards and overdrafts. Others are turning to payday loans, which come with extortionate APRs but are often the only possible short term solution for those with poor credit.

There are now set to be discussions in the House of Commons with regards to whether increasingly stringent legislation should be brought in with regards to the charges made for credit by payday loan provider and home credit lenders. The House of Commons is set to vote on the backbencher motion later this week. The move comes as consumer prepare for another year of hardship and worry over jobs, benefits, debt, and other financial issues.

It was reported recently that one in every ten people were unable to make their wages stretch for the whole month, and their wages tended to run out on the 20^th of each month, leaving them with more than a week without money.

Tags: solution, accessible, check, great value, backbencher, hardship, week, caps