Recent statistics have revealed that millions of UK residents are likely to take out payday loans over the Christmas period and will struggle to repay them.

Money worries are at the highest level ever recorded, there have been calls for tougher regulations around payday loans.  Downing Street have said that it is trying to bring in an industry code of practice.

Payday loans are small, unsecured, short-term loans designed to tide people over until they get their next pay packet.  In theory it sounds like a good idea as there are times that we need money for emergencies.

If the money borrowed is paid back as agreed on the next pay day, this type of lending can be far cheaper than paying an unauthorised overdraft or a credit card charge.  The problem with payday loans is when people cannot afford to repay them.  However, if the loans are rolled over, debts can quickly escalate.

There are thought to be about 2,000 High Street payday loan shops in the UK.  Some are also pawnbrokers as well, operating out of the same premises.

There are also thought to be more than 100 payday loan companies on the internet.

If you cannot afford the full payment, you can get into a cycle where you’re just paying off  the interest.

According to figures release by the Citizens’ Advice Bureau, the number of people running into payday loan debt has increased by 400% over the last 24 months.  It says payday loans are too easy to get and it is calling for tighter regulation of them.

Sarah Brooks, director of financial services at Consumer Focus said “We would like to see sensible safeguards put in place to stop payday loan users from getting caught in debt traps,”

Hairdresser Mary Barnes from Manchester took out a pay day loan after she fell behind on her mortgage.  She was already overdrawn and over her limit on her credit cards.

”I didn’t know what else to do as all my debts were mounting up, it really was a last resort,” she said.

“I borrowed £500 hoping to pay it back a few weeks later but I wasn’t able to afford it.

“Each month it cost another £74 to renew the loan after a while initial loan of £500 ended up costing me nearly £900,”

David Cameron’s spokesman said the government was working with the industry and consumer organisations on the Payday loan issue.  He stated that he was very wary of driving people towards loan sharks by introducing strict regulation.

The Consumer Credit Counselling Service in the UK advised payday loans should be treated as a very last resort.  If you find that you can’t repay your payday loan, it is essential that you seek free advice from a debt charity as the situation will escalate.

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Many individuals in the United Kingdom are having difficulties with regards to maintaining repayments on things like credit card debt, personal loans along with other costs.  Its a headache for many people however when it comes to the phase where you’re being forced to scale back on things like food shopping or heating up your property; this is the time it becomes a significant problem that should be tackled.

If you’re at the stage in which you cannot manage to pay things such as your electric bills or your council tax then you will want to check out the options that exist. The present state of the economic climate implies that a lot more people are, battling to ensure all their responsibilities are fulfilled without entering into the red.

If you feel that you are slipping behind on bank card and loan re-payments you will no doubt feel that this is extremely distressing, however you will find steps you can take to try to deal with the problem.

Firstly you must  determine if the scenario is a short-term factor or if it’s simply going to get a whole lot worse.  If the last option applies, you will want to make contact with your loan provider and let them know the degree of your problems. Loan companies take care of many people who encounter financial difficulty and can have methods in place to help you.  Dealing with the issue early on will be the starting point in conquering it. At this time, a number of loan companies won’t provide support until you have genuinely fallen behind on your own repayments.

In the event that this will be the case; so be it.  You have carried out everything you can simply by telling them of your monetary difficulties.  The majority of lender’s, nevertheless, will endeavour to set up an alternate repayment routine. This implies they might be in a position to decrease rates of interest or spread your repayments over a longer term.

Within certain cases, your loan provider might provide you with a ‘payment holiday’ for a number of months. If your scenario is not likely to greatly improve in the future, your loan provider will often send letters demanding the actual missed repayments or even request the outstanding sum entirely.  You ought to bear in mind to certainly not take these personally. You should handle them in a relaxed way.  These are regular letters from the loan companies and you should keep in mind their primary objective is to get just as much as their cash back as is possible.

You’ll definitely want to prevent the chance of your loan provider taking you to court, therefore at this time you will have to bite the bullet if you’re not able to afford monthly payments, and enter some type of debt management program, Individual voluntary agreement or think about bankruptcy options.  In the event that you don’t believe you’ll be able to repay an acceptable sum towards your loan repayments, it’s important you receive debt advice from an expert.

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