The amount of instant cash loan debt doubled in 2011 in comparison to the year preceding it, according to one of the largest debt charities in the UK.
While no credit check short term loans have been touted as the answer to the problem of being unable to secure funding from a traditional source, such as a bank or a building society, financial experts say that too many providers of instant cash loans may be encouraging irresponsible borrowing from customers. In fact, the number of people contacting the Consumer Credit Counselling Service with concerns over payday lending in 2011 numbered more than 17,400, a marked increase over 2010’s figure of less than 8,000, the debt charity said.
The CCCS also said that the number of people approaching the group with payday lending-related debts has increased six-fold since 2009. The problem, financial experts say, is that payday lending carries very high charges and fees in the event of a borrower failing to repay a loan in a timely manner.
The payday lending industry was criticised last week in Parliament, with a group of MPs urging the Government to take action both swiftly and decisively to place more protections in place for the more vulnerable members of British society by limiting the scope and reach of payday lenders. The MPs called for lending criteria to be subject to stricter rules in order to discourage disreputable lenders from preying upon jobseekers, students, low income earners, and other vulnerable classes of people that are running into trouble after taking out a loan that they cannot easily repay.