Payday loans are more popular than ever in the UK and this in itself is a worrying as it reflects on the amount of people who are not able to borrow from more common lending companies such as banks. Everyday articles are written and statements are made condemning payday lenders but are they not simply providing a service which is necessary due to the harsh nature of the current climate. The banks will not lend to people with bad credit, so what alternative do people who are desperate have?
The government might suggest that credit unions are a good place to start but in reality they cannot lend money as fast as a payday lender and these loans are usually taken out in emergency situations. If payday loans are band then we are going to see people going to unauthorised loan sharks who can lend at any rate they chose and use means for recovering their money which may not be legal.
Payday loans should be allowed to continue but there ought to be more regulation in this area. Rates of interest should be capped. Not at a level where the lenders cannot make a profit but at a level where borrowers are not going to end up stuck in a spiral of debt.