Payday loan leaving people with “horrifying” debt problems

Keeping track of finances is becoming increasingly difficult for people in the UK as income levels drop alongside the rise of prices for daily essentials.

This is forcing many adults to take drastic measures, including taking out a payday loan.

There has been much said about this industry and how it can be destructive to people's lives and the government has been drawing up the Private Members' Bill, which seeks to crack down on the advertising strategies used by some companies.

In conjunction with this, the Citizens Advice Bureau has displayed evidence of the "absolutely horrifying" debt problems people are now facing as a result of taking out a payday loan.

Some of the more serious cases include one borrower who fears he will lose his job after payday lenders left just £1.17 of his weekly wage in his bank account, meaning he had no money to pay for travel to work or board where he is staying.

Another person was offered a discount loan once the original one had been repaid, with the lender pestered them with numerous phone calls, texts and emails offering to roll over the cash owed. 

Meanwhile, someone had the funds set aside to pay for their council tax debt taken by a payday lender without warning, meaning they now fear they will be taken to court by the local authority.

Citizens Advice has consistently expressed concerns that adverts for payday loans mask the hardship and devastation caused by irresponsible lending and appalling treatment of customers.

Recent figures from the charity found that in more than four out of five cases where people are struggling to pay back the loan, companies are not freezing interest or charges, nor are they treating people sympathetically – despite promising to do so.

Citizens Advice chief executive Gillian Guy said: "Some of the problems reported to Citizens Advice about payday loans are absolutely horrifying.  People are in severe debt and distress because of the exorbitant pressure payday lenders put them under to repay unmanageable loans."

By Joe White