Over the last few years the cost of most essential items has risen significantly. With everything from groceries to petrol rising people have been forced to try and stretch their income further than ever before and further than it can go. Because of this a growing number of people are running out of money before the end of the month and are having to seek payday loans to get them through until they get paid. The problem is however that the companies offering these loans do so at high interest rates and let people use them over and over again.
These payday lenders have very limited regulations to abide to once they have a license in accordance with the Consumer Credit Act of 1974. People start out by looking for a little bit of help to get them through until payday but they then start using these loans often and the debt becomes much more than short term and eventually reaches an unmanageable level.
The issue with payday loans is that when people take them out and repay them when they get paid, it leaves them shorter the next month and so they need to borrow more. This cycle continues until the amount they need to pay back surpasses their income and what they then have is debt.
At the moment there are no regulations stopping people from borrowing from these lenders month after month. Lenders who allow people to do this are extremely irresponsible as they know that it is only going to worsen the person's financial situation.
There needs to be some sort of obligation on lenders to make customers aware of the type of loans they are offering and how rolling over those loans will affect them. There should also really be a limit on how many times a person can use payday loans over a twelve month period as this will help to limit the debt which people using this type of loan are building.
These payday lenders have very limited regulations to abide to once they have a license in accordance with the Consumer Credit Act of 1974. People start out by looking for a little bit of help to get them through until payday but they then start using these loans often and the debt becomes much more than short term and eventually reaches an unmanageable level.
The issue with payday loans is that when people take them out and repay them when they get paid, it leaves them shorter the next month and so they need to borrow more. This cycle continues until the amount they need to pay back surpasses their income and what they then have is debt.
At the moment there are no regulations stopping people from borrowing from these lenders month after month. Lenders who allow people to do this are extremely irresponsible as they know that it is only going to worsen the person's financial situation.
There needs to be some sort of obligation on lenders to make customers aware of the type of loans they are offering and how rolling over those loans will affect them. There should also really be a limit on how many times a person can use payday loans over a twelve month period as this will help to limit the debt which people using this type of loan are building.
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