Debt advice expert urges non-reliance on short term loans

One debt advice expert from Northumberland has been campaigning against short term loans recently, telling residents that they should avoid taking out same day loans to cover the cost of monthly expenses.

The chief executive of DAWN Advice, Liz Chadwick, issued her warning against using payday advance companies on the heels of news from Citizens Advice that there are four times as many people that could be in poor financial health and availing themselves of no credit check loans than there were two years ago.  Ms Chadwick remarked that the advantages of short term loans, which include same-day payments, instant approvals, and the lack of any need for credit checks, can result in people being lured in without any consideration to the long-term consequences of such an action.

The Bladgon-based chief executive stated that these short term loans may seem to be the simplest and easiest solution to cover monthly expenses, but it can sometimes lead to just papering over the cracks instead of fixing the problem in a more permanent manner.  In the event of a repayment deadline being missed, debts will roll over, she added, which can result in unsettled interest growing quite quickly and very easily getting out of hand.

Ms Chadwick did state that measuring short term loans against other forms of credit was exceedingly difficult, due to their very high APRs.  However she acknowledged that short term loans are short-term, and are not used to provide credit to borrowers for nearly as long as a full year, though she did call using short term loans a ‘dangerous cycle’ that could pose difficulties in breaking.

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