Many things have changed with the introduction of the computer age into everyday life and the modernisation of short term loans is nothing different. Who would have imagined only a couple of decades ago that one could make an application for a loan sitting in the comfort of one’s own home, and get a virtually instant response a few minutes later with the money in the bank?
Of course, there is another side to all this. People do not provide services for nothing and short term loans online come with a pretty hefty price tag. The interest rates when quoted on an annual basis – the APR– seem astronomical to the observer, but short term loans spokespeople say that this is not a fair criterion on how to judge their services.
They say that their instant cash loans are only designed for shorter periods and the amount to be repaid seems a lot more realistic.
In any event, looked at from whatever side of the payday fence one sits, all the criticism in the world is not stemming the tide of would be payday borrowers who have swelled in ranks by a factor of 400% over the last four years and shows no signs of slackening off.
Payday lenders have been around in one form or another for centuries and are closely aligned to pawnbrokers. The pejorative term “loan shark” refers to another group of short term loan providers with a seedy nature. These are the “doorstep” lenders or “street” lenders, who seem to swarm in numbers and activity in some of the poorest parts of the country. These are illegal operators as they have no licence to lend.
Payday lenders are all legally licensed to trade and many can be found in the average high street or clearly advertised in prominent public places, like the sides of buses or on the walls of tube stations.
The attraction of short term loans are varied, but are intimately tied in with what else is happening in the economy. Most borrowers are actually in jobs, but are either poor in looking after their spending habits or there has been a worsening of the balance between income and expenditure. As Dickens’ fictional character, Wilkins Micawber, in Victorian era London discovered, the “misery” he refers to in his famous principle equates to the experience of a typical payday borrower who spends more than they earn and simply cannot pay back their loan on time!