Payday loan companies have dramatically increased their advertising budget this year in a bid to entice cash strapped Brits to take out short-term loans.
Although the instant cash loan sector is regulated by the OFT, it is not known how many of these companies operate in the UK.
In the year ending September 2011, wonga.com spent in excess of £13 million on advertising. In the comparable period last year, it spent just £2 million. Another company, quickquid.co.uk, has doubled the amount it spends on advertising from just under £2 million to £3.9 million.
A lot of new payday advance companies have started up this year and this trend has caused concerns amongst debt advisory groups.
Damon Gibbons, the Centre for Responsible Credit’s chief executive, said that in a lot of cases these companies make their money from people who already have severe financial problems and the last thing they need is another loan. What they should be doing is turning to a debt advisor to sort out a way to get their finances under control.
Same day loans companies are likely to be inundated with business in the run up to Christmas. However, borrowers should make sure they understand the importance of repaying their loan within the designated time frame or face enormous interest and admin charges.
Individuals who already have a high level of debt may find it better to ‘cancel’ Christmas this year rather than get themselves into a deepening spiral of debt that could be nigh on impossible to get out of.