Debt charities unhappy with payday lenders

As reported by one of leading debt charities of the country, there has been an increase in the number of people who have been complaining regarding Wonga, and other payday lenders. The rate of increase has been as high as 94% according to the National Debtline service. Last year it entertained almost 20,000 calls complaining about payday loans.

Payday UK, Wonga, and Money Shop, which are among the biggest lending companies, have been complained about the most, reported the helpline operator Money Advice Trust. The chief executive of the trust, Joanna Elson, believes that there is a major flaw in the process of providing the applicants with an amount of credit that they would not be able to repay.

An absence of official records regarding the details of the payday lending faction of the business has been noticed. The research company, Datamonitor, however, has pointed out that there is a reasonable chance of the loans adding up to nearly 3.4billion pounds, by 2014.

Sums less than 500 pounds are usually provided to the customers by these payday lenders. The customers are helped out until they receive their pay cheque. Services by theses lenders tend to be making quick access to cash available to those who need it until payday rolls around.

It has been claimed by certain consumer groups and charities that since these loans are provided at a very high interest, people are often unable to repay, and end up borrowing more money to repay the previous sum. As a result of this most of the customers are trapped in the vicious cycle of debt.

It has been observed by The Citizens Advice service that the number of callers stuck within a mesh of multiple debts has increased ten-folds, in the last couple of years. Some of those payday lenders who have been accused of acting in an unfair manner have been suspended from functioning by the Office of Fair Trading.