One major payday advance lender has recently said that it has experienced a fourfold increase in the number of people applying for short term loans over the last two weeks.
With the lion’s share of its borrowers between the ages of 18 and 35, the instant cash loans supplier said that approximately two million Brits have submitted applications for finance in one short fortnight. There seem to be no indications that the popularity of this form of credit will decline anytime soon, with industry experts predicting that for the first half of 2012, this figure will rise to more than 3.5 million.
The sales and marketing manager for the lender, Ian Porter, remarked that application levels have been incredibly high during the past month, with the last fourteen days doubly so. This trend cannot be seen as surprising, another expert said, as Christmas has traditionally been one of the most expensive times of the year, though the expert added that anyone considering taking out a loan should first make sure they have a bulletproof financial plan to make their repayments in a timely manner to avoid charges and fees.
In related news, the payday advance industry has been under fire recently for the high APR interest rates charged on their short term loans, with many calling the rates ‘exorbitant.’ However, these fees are quite often less expensive than paying an unauthorised overdraft for the same amount of cash, leading to many using the service provided by payday lenders as a cheaper alternative.
Other industry experts have said that using an APR interest rate to calculate interest for a short term payday advance is inherently misleading, as APRs are inaccurate when dealing with loans of only a few short weeks. However, the payday lending industry is bound by UK regulations to use APR rates in their documentation.