What Are The Risks Of Using Payday Lenders?

When an unexpected and urgent need for cash appears, there is no cash available to solve the problem. Examples may include vets fees, car repairs, unexpected telephone bills or even urgent utility bills that appear each quarter instead of [each|every] month.

As people with low incomes have to pre pay for things like electric and natural gas, these individuals can often find them selves with no lighting or heat if they have no money for their key meter.

Families with young children can sometimes access a line of credit from the social security who are unwilling to let a family with young children sit around in their houses with no electric.

For single individuals with less of a social safety net they are often trapped and forced into a doomed spiral of exploitation from predatory lenders. Imagine the following scenario. Dave is a trainee electrician on a minimum salary. He was out of work for 6 months and defaulted on his credit card, his bank account went past his agreed borrowing limit and the bank closed it and sold on the debt to a debt collector. He was pulled up by the law while driving his van with two bald tyres. The officer was unimpressed with his attitude towards him and ordered a tow truck to tow his van away.

Dave was stuck with no car to get to work and no money to get it out of the impounded facility and buy the replacement tyres. The daily fees for storage were mounting up. His friend he drank with told him to go on the web and look for a no credit search pay day loan so he could sort out his travel issues. His bad credit would be no problem as there was no credit check.

Dave was open-minded and happy that someone could be willing to offer him credit and he went on the internet to apply. After a certain amount of scanning and faxing documents to the loans company £350 arrived in his bank account, enough for his new tyres and the removal truck and storage charges. Everything went well until his pay day when the pay day loans company took £437.50 from his account. He was able to pay his rent for his bed-sit, put some diesel in his van and then he was back to his zero bank balance.

After a friend of his expressed his anger with Dave continually smoking his rollups and using his phone credit, Dave decided he was sick of having no cash. Dave made a quick telephone call and the pay day loans company were all too willing and able to lend him £500. Glad for their "help" Dave was able to have a couple of nights out and buy his own cigarettes. His pay day came round again and £625 was removed from his bank account. Also, a couple of months ago he was foolish enough to give his visa debit card number to the debt collector that had [purchased|bought] the debt from his previous bank. The debt collector caught his bank account at just the right time to remove the remaining cash.

Dave sat alone in his bedroom with no cash trying to work out how two bald tyres could have cost him £350 and a ludicrous £275 in interest and fees.