PAYDAY MARKET RECAP FOR WEEK ENDING 10 FEB 2013
The payday advance sector, already under fire for sharp business practices, has come under new criticism for some lenders that may be targeting students.
Providers of short term loans say that they perform an important service by providing consumer credit to those who would otherwise be left out in the cold by traditional lenders due to having a poor credit record – either because of having no history of lending or due to a rocky credit history in the past. This latter case is quite prevalent in the current economy, as it has left individuals and households alike reeling from extra costs originating from wage freezes and job losses, especially since you still need to pay your bills, and payday lending has grown by leaps and bounds as a result of the credit crunch and resultant economic downturn – despite the fact that they’re so expensive to repay.
Unfortunately in their zeal to grow market share, many payday lenders have been resorting to underhanded or less-than-honest tactics to increase the number of borrowers they provide their ‘valuable service’ to, and many detractors accuse these lenders of purposefully targeting the vulnerable for payday loans. The problem here is that many vulnerable Brits end up getting themselves in serious hot water once their repayment deadline comes and goes, resulting in compounded interest and high late fees that can pull almost anyone into a downward spiral of debt.
Students often fall into this category of vulnerability, especially since many students need to balance attending university and working a low-paying part time job in order to supplement their finances. Coupled with the inexperience of many students when it comes to dealing with money, they may seem like ‘easy pickings’ to many diabolical providers of short term loans who are more interested in hooking customers for revenue streams than they are in genuinely helping out people with nowhere else to turn.
Some say that revamping the educational system to place a better emphasis on financial planning and budgeting would eliminate or at least reduce the number of students lured in by the siren song of payday lenders. This is of course a favourite argument put forward by lenders themselves, as it could never be their fault for targeting young people with little in the way of economic wisdom, could it?