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1.2m people used payday lenders.

Article by Paymex 19th Aug 2010 00:00

New research from Consumer Focus shows that the number of people taking out payday loans has quadrupled since 2006 to 1.2 million people, borrowing a combined 1.2 billion per year.
In its study, ‘Keeping the Plates Spinning’, Consumer Focus estimates that two thirds of payday loan borrowers have a household income of less than £25,000 and on average take out 3.5 loans typically of £294 per loan.
The study also found that payday loan users tend to be young and single and often weary of mainstream banks because they had been treated poorly in the past or because they had exhausted overdraft and credit card facilities with them.
According to the study, a typical payday loan costs around £20 for every £100 borrowed and if the loan was deferred or "rolled over" for six months the cost of repaying the loan would rise to as much as £660, generating APRs in the region of 1000% to 2000%.
A spokesman for Baines and Ernst, one of the UK’s largest debt solutions providers, commented “Use of Payday loans is often a symptom of an underlying debt problem. Before taking out a payday loan the people should seek professional debt advice so they are aware of all their debt options.”