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Payday Lenders are 'modern day loan sharks' who 'wreck lives'

15 Jan 2014

Citizens Advice Scotland have said that payday loans can wreck peoples lives, and have warned Scots not to use them but to seek fairer credit options instead. 

The call comes as new figures from Shelter show that many people use payday loans to pay their rent and mortgage costs.

 

CAS Chief Executive Margaret Lynch says, 

“CAB advisers across Scotland now see over 100 cases every week of people who have taken out a payday loan which has got them into crisis debt. These sort of high interest loans, combined with the way that many of the lending companies operate, really do wreck peoples lives. We see it every day. 

“We are not against lending in principle. People on low incomes often need to borrow money just to get by. That is a fact of life. So we believe there is a place for lenders, and we think they are entitled to make a fair profit. All we ask is that they operate responsibly, don’t exploit peoples’ financial problems, and stick to the agreements that they themselves have made. 

“Sadly our recent research has shown that most of the payday loans industry has failed on all of those counts.  They are the modern-day loan sharks, and we urge people to avoid them and look instead for other lenders, like Credit Unions, who operate much more fairly and are easier to re-pay. 

“Nobody should be using payday loans to fund their rent or mortgage costs, and nobody should be taking out loans every month. If you are in that situation you really need to get help to sort out your financial problems. The CAB service gives free, confidential advice on these issues, and also on debt management for those who are already in debt. Contact your local CAB or call our national advice-line on 0808 800 9060.” 

Last week CAS called on the organisers of the Glasgow Commonwealth Games to ban payday loan advertising during the games. Margaret Lynch repeats that call today: 

“Major sporting events used to be routinely sponsored by cigarette and alcohol companies, but now it is accepted that such damaging products have no place in sport. We believe that payday loans should be in that same category. The pride that Glasgow and Scotland feel in hosting those Games will be tainted if they are associated with companies who trade in human misery – whether that is tobacco, alcohol or payday loans.” 

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