Payday loans deemed most expensive forms of loan
Research from price comparison service, uSwitch.com, has found that while Payday loans may offer quick and easy cash, they are one of the most expensive forms of loans in the UK, with some APRs of up to 9889.3%.
According to uSwitch.com, a consumer taking out a payday loan of £750 could end up owing £1,687.50 if they defer repayments for five months.
Payday loans are becoming more popular and are seen as attractive to younger people who are finding it hard to secure finance amid the credit crunch, according to Frances Walker of the Consumer Credit Counselling Service (CCCS).
Typically, lenders only require valid ID, proof of employment, and a post–dated cheque, said Ms Walker.
According to Credit Action, at the end of November 2008, total personal debt in the UK stood at £1.456 billion.
It is advisable that Payday loans are best reserved as a product of last resort, since loan interest rates offered may not be competitive by comparison to high street rates.