1 in 7 Britons Use Payday Loans to Cover Rental Costs

09 January 2012 Categories: News

1 in 7 Britons Use Payday Loans to Cover Rental Costs

A survey conducted by YouGov on behalf of the London charity Shelter has shown that nearly 15% (1 in 7) of the 4014 people interviewed used payday loans, or another form of credit, to cover rental costs during 2011. If these results are taken to be indicative of the trend in the UK as a whole then it could mean that over 1million tenants and homeowners felt the need to resort to expensive forms of credit during last year simply to keep their homes.

Payday loans are known to be a ‘dangerous’ form of credit with some companies charging interest rates equivalent to 4000% APR. The real danger comes however when the end of month repayment is missed and the loan rolls over to the following month, complete with additional charges and interest.

Chief Executive of Shelter, Campbell Robb commented “These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home. Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable.”

Unfortunately the UK is one of the only countries in Europe that refuses to regulate payday loan lenders. Their TV advertising strategies are aimed at making their loans seem like the perfect answer to short term debt worries, but when their extortionate interest rates and hidden charges are taken into account they become one of the worst forms of credit available, and one that, according to Money Saving Expert Martin Lewis, should never be used.