Short-term credit created by Payday Loan companies becomes a danger when it's used by people who don't understand the costs surrounding Payday loans and, especially, those who don't know how they are going to pay their cash until payday loan back.
More people than ever are getting into trouble after taking out a cash advance without and consideration as to how and when they might be able to pay back the cash advance these payday loan lender can often charge in the region of 4,000 per cent APR from certain payday lenders.
Payday loans are intended as a short-term stop gap to help out people over for a few days or weeks until they get paid on payday. The fact that most payday loan providers have no credit scoring and don't share data about their advance means it's easy for someone to take a cash advance at several times over what they can afford and practically guarantees acceptance.
A charity set up to tackle payday loans reported 16,500 people approached it this year with problems linked to payday debt with more than 2,000 of them struggling with five of these cash advance or more. Not only that, The Consumer Credit Counselling Service (CCCS) said it was on course to see a record number of people who were experiencing troubles with Payday Loans this year, having assisted almost 17,500 clients last year and just under 6,500 in 2009.
The Cash Advance industry has been thrust back in the spotlight recently partly due to payday lender Wonga's sponsorship deal of Newcastle United costing millions - so that's where all those payday loans have gone to! Wonga signed a four-year endorsements deal with the Premiership Club drawing mixed reaction from fans and yet to be known reaction from Wonga's cash loan customers!
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