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Payday Loans on the Increase

Written By On 24/06/2013

Even though there are no official figures around concerning payday loans, it is clear that this type of borrowing is becoming more widespread.

In 2012 Consumer Focus conducted their own research that led to them estimating approximately nearly one and a quarter million people in the UK had taken out at least one payday loan in 2009. According to their calculations, most applicants took out an average of between three to four loans each in the same year.

The Public Accounts Committee estimated that the amount of people across Britain now using payday loans is around the two million mark.

This type of short term loan continues to grow and be used by more people each year. The Office of Fair Trading reported that £900 million pounds of payday loans were borrowed in 2008, but say it is expanding very quickly. In an interim report conducted by the OFT at the end of last year, they believe that figure has doubled as it approaches the £2 billion pound barrier.

In the same report, the OFT said approximately 240 companies in total within the United Kingdom are offering payday loans, but most of the loans were being supplied from only fifty of them.

The PAC estimates seventy two thousand lenders throughout the credit industry for consumers, but this does also take into account credit card companies, pawnbrokers and even the people that turn up on your door to service a loan.

It is probably unfair to stereotype, as contradictory results have been produced by researchers, but nevertheless the OFT believe from their own evidence that the most likely person to apply for a short-term loan would be a young man earning at least £12,000 per annum. He would probably be renting as oppose to owning his own property, single and without any children.

This person might choose this type of loan as a reasonable option to receiving an unnecessary high banking charge for going into overdraft or reaching any credit limits elsewhere they may have.