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'Payday loan' worries mounting in East Lancashire, warns CAB
BOSSES from branches of the East Lancashire Citizen’s Advice Bureau have warned about the dangers of ‘payday loans’.
Lynda Clegg, manager of four bureaux across Burnley and Pendle, said hundreds of clients were find- ing it difficult to get out of debt.
She said: “We have seen an increasing amount of people taking out loans and the numbers are still mounting up.
There is a snowball effect with people taking out a loan to pay another one off.We had one person borrow £200 to pay for a utility bill and they ended up paying back £1,500 because of the ridiculous amount of interest.
They are really bad news. The adverts on television are just as bad as the gambling ones and the majority of people using them are on benefits.
“What’s sad is that a lot of parents are taking out the loans with 1,000 to 2,000 per cent interest to buy Christmas presents for their children.”
Payday loans are for relatively small sums of money for short periods of time but they attract extremely high rates of interest. Demand for them continues to grow as unemployment rises.
Most of the payday lenders have now signed up to a voluntary charter that must be in place by late November.
Failure to do so could mean sanctions and the Office of Fair Trading has been given powers to stop rogue money- lenders and debt collectors.
Blackburn CAB manager David Dickinson said the demand for financial help in Blackburn was also on the rise.
He said: “Clients are worried that they can’t pay back their loans because the majority of the online lenders would prefer to communicate by email so it takes longer to sort out an agreement.
“The interest rises and it causes anxiety and stress for the clients. The CAB are here to help.”
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