The Risks of Misusing Payday Loans To Keep A Roof Over Your Head

Whilst payday loans have always been something of a risky business given their enormously high APRs and the quick repayment period, recently the pressures that many are feeling financially have made them a rather dangerous last resort.  Research by the housing charity Shelter has found that more than a million people in Britain are struggling to pay their rent or mortgage and are turning to payday loans to keep a roof over their heads.

The research shows that two thirds of the British public regularly find it difficult to cover their housing costs and 4% have already fallen behind with payments that could mean they could potentially lose their homes. Shelter has warned that financial pressures, rent rises, job losses and the like, are forcing people out of their homes and could result in a significant jump in homeless family figures in 2013.

The number of people using payday loans has increased markedly in the last couple of years, with Debt counselling charity StepChange estimating a rise of 300% over the past two years.  Even though payday loans often have an annual interest rate of around 4,000%, the speed with which they can be obtained and the way they are often marketed as a safety net has seen many Brits opting to use them as a quick fix to avoid losing their homes.  Of course the danger is that if the loan cannot be paid back, it has to be continuously repaid and withdrawn again, with the interest often at around £25 for every £100 borrowed.

Most of the professional advice available is to avoid payday loans like the plague and to try find alternative ways to manage issues with housing. One of the simplest ways to keep your monthly finances under control is get the best possible deal you can on your housing costs – speak to your lender for advice on reducing your monthly bills.

If you are facing problems, and would like to speak to one of our advisors in confidence, please call Jemima Poppy today on 01908 232879.