Payday loans are very common in UK. This is a typical loan where a person in need goes to for emergency money. This usually pays out smaller amount for the purpose of paying emergency situations like medical bills, tuition and home repairs for example. Usually the amount to be borrowed are only up to £500 that this kind of amount should be paid already on the next payday. United Kingdom APR or annual percentage rate amounts to 1,000% or more than. For every £100 that is borrowed, it costs as much as £25 interest.
As to how common this kind of loan can be in UK this has been growing in a fast manner. There has been an increasing number of borrowers because a lot already discovered how it is of being help for people to use a small amount of money within a short period of time. This is really a great help and affordable as well. With that increasing number UK has already earned revenue amounting to £242m.
Where it Originated
Payday loans have been introduced by the United States but in UK it has been growing so fast within 5 years. UK lending institutions lends a small amount of money for a short period of time usually within 2 weeks or until the next payday. and this is why a lot of borrowers in UK can really afford to avail of this loan.
This is why the number of borrowers in UK has increased and a borrower usually takes on this kind of short term loan for 6 times in a year. These typical borrowers do have an income below £25,000 This kind of loan would cost £25 in every borrower that would borrow an amount of £100 every month. That means that an amount of £300 loan will cost a borrower to pay £375 after a month.
There are no limits when it comes to rolling the interest on this short-term loan. There is also no limit to the rates of this loan to the money lending institutions that would charge their borrowers. A usual borrower is charged 1,355% APR . Usually these money lending institutions charges 25% to 30% .
Criticisms Taken
Because of the fastest growth and highest payday loan country, UK faced issues regarding this, as there are already a lot of people in UK availing of this short term loan and has been seen straight for 6 months. It was found out that there were advertisements promoting this payday loans in social networking sites without following the proper advertisement rules. There was no APR displayed which there should really be displayed as it is mandated by the UK commercial standards. As there is also a big money lending institution that has been promoting this advertisement to younger ones encouraging them to experience how to be in debt. Because of this fast rising short term loan, a lot of thieves are also eyeing this one. These hackers are now being followed by the money lending companies for the payment of their loans which these certain people has never even applied for a loan.
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