One Medway councillor has been lobbying to stop the opening of new money lending shops in parts of the region as concerns about an increase of predatory offering of instant cash loans to the vulnerable.
Believing that these shops, which offer quick loans to customers, are targeting low income earners that are already struggling with debt, Councillor Vince Maple has called for local authorities to be granted more permissive powers in limiting or allowing the proliferation of these shops nearby, with the argument being put to the government if Medway Council agrees with Mr Maple.
However, the Consumer Finance Association, the organisation that represents several of these money lenders, has said time and again that people will not claw their way out of debt by increasing their borrowing. The Consumer Finance Association’s chief executive, John Lamidey, said that the majority of long-term debt was on bank overdrafts and credit cards.
Attempting to borrow your way out of trouble from a CFA-represented instant cash loan provider – or anyone else – is simply not going to work, Mr Lamidey said. He recommended that anyone with long-term debt problems to seek out their local Citizens Advice Bureau.
Medway CAB chief executive, Dan MacDonald, added that the Bureau needs to increase its efforts to educate people living within Medway. In order to break a generation of debt, CAB needs to be encouraging financial literacy education at a very young age in schools, Mr MacDonald said.
Payday loan proponents say that the best way to use this form of short-term lending is only in an emergency situation, and only when you know that you can afford to repay the loan without having to take out another one.