While the humble no credit check instant cash loan has been in existence for quite some time, it has only been recently that payday advance providers have grown wildly in popularity, leaving many to wonder why the sudden interest from campaigners for and against payday lenders.
Many borrowers find short term loans the easiest and quickest way to get their hands on much-needed funds in the event of an emergency. The lack of having to submit to a credit check or having to fill out massive amounts of paperwork also ticks the boxes for many borrowers, especially when they have a dire need for cash, such as their car or house being in need of emergency repairs.
The rough economic waters in the wake of the credit crunch and resultant economic downturn several years ago has also played a role in the primacy of payday lending firms today. The number of Brits that were affected by jobs losses and pay freezes remains high, and while cost of living increases have recently leveled off, inflation rates were as high as 5 per cent as recently as late 2011, making what little cash individuals still had in their pockets not go quite as far as it did before the recession.
Many Brits would have turned to the high street in an era of financial difficulties in the past, yet as bank failures and bailouts precipitated the credit crisis, confidence in traditional forms of lending plummeted. At the same time, high street lenders restricted access to credit, leaving those in need with no recourse but to seek alternatives such as pawnbrokers and payday lenders; combined with the accessibility and flexibility of these alternative lenders, this worked to encourage Brits in increasing numbers to rely upon what some have criticised as ‘legal loan sharks’ due to the high interest rates on this form of lending.