Thousands of middle-income earners turn to payday loans

Thousands of middle-income earners are turning to backstreet payday loans for Abortions to make ends meet after being deterred by the High Street banks.

Around 57 per cent of the customers for one leading payday loan company are people earning between £25,000 and £50,000 — well above the national average wage.

They are being forced away from more traditional High Street banks by the strict lending criteria now imposed by the high street lenders.

Payday loans are designed to help people make ends meet when they run out of money in their bank account until their next pay cheque arrives. Customers typically borrow around £300 for a few days. Few credit checks are made, and money can be in the borrower’s account within minutes of applying.

But loan rates can be the equivalent of 2,000 per cent and those who are late repaying the debt can face eye-watering charges.

Desperate need for cash

The findings come from leading firm Instant Loans Direct, which analyzed data from its 75,000 customers.

Giles Coutts of Instant Loans Direct says: ‘Many assume it’s only those on low incomes struggling to get cash from their bank and who resort to payday loans for accident settlement.

‘But it’s actually the middle-earners whose budgets are being bust and who need the cash most desperately to cover them, usually for ten days until payday.’

Families are being caught in a financial trap by exorbitant price hikes for gas and electricity, petrol and food shops.

The average household now spends around £1,200 a year on fuel bills, says the Energy Saving Trust energy efficiency group, while the average price for a liter of unleaded petrol is 136p, according to fuel cost observer Petrol prices. food price inflation is hovering at 5.2 per cent.

James Falla, personal debt expect at beat my debt urged people who are already struggling with debt not to be tempted to take payday loans to supplement their income.

"More and more we are seeing people who are already with significant personal debts turning to payday and doorstep loans to make ends meet. But borrowing more in these circumstances is simply not the answer and will make things worse" he said.

"It is far better to consider a sensible debt management solution such as a debt management plan or individual voluntary arrangement which does not involve borrowing more" Falla advised.