Are Payday Loan Lenders Predatory?

When an unexpected and urgent need for money appears, there is no cash available to solve the problem. Examples may include vets bills, car repairs, unexpected telephone bills or even urgent utility bills that appear each quarter instead of [each|every] month.

As individuals with low incomes have to prepay for things like electricity and natural gas, such people can often find them selves with no lighting or heat if they have no money for their key meter.

Families with young children can sometimes access a line of credit from the social security who are unwilling to let a family with young children sit around in their houses with no electricity.

For single individuals with less of a social safety net they are often trapped and forced into a doomed spiral of exploitation from unscrupulous loan companies. Imagine the following scenario. Dave is a trainee electrician on a minimum wage. He was out of work for six months and defaulted on his bank credit card, his bank account went past his agreed borrowing limit and the bank closed it and sold on the debt to a debt collector. He was pulled up by the police while driving his van with two bald tyres. The officer was not impressed with his attitude towards him and ordered a tow truck to tow his car away.

Dave was stuck with no car to get to work and no money to get it out of the impounded facility and buy the replacement tyres. The daily fees for storage were mounting up. His friend he drank with told him to go on the internet and look for a no credit check pay day loan so he could sort out his travel problems. His bad credit would be no problem as there was no credit search.

Dave was open-minded and happy that someone [would|could] be willing to offer him credit and he went on the internet to apply. After a certain amount of scanning and faxing documents to the loans company £350 arrived in his bank account, enough for his new tyres and the tow truck and storage charges. Everything went well until his payday when the pay day loans company took £437.50 from his bank account. He was able to pay his rent for his bed-sit, put some diesel in his van and then he was back to his empty bank account.

After a friend of his expressed his anger with Dave continually smoking his rollups and using his mobile credit, Dave decided he was sick of having no cash. Dave made a quick telephone call and the pay day loans company were all too willing and able to lend him £500. Glad for their "help" Dave was able to have a couple of nights out and buy his own cigarettes. His pay day came round again and £625 was removed from his account. Also, a couple of months ago he was stupid enough to give his visa debit card number to the debt collector that had [purchased|bought] the debt from his previous bank. The debt collector caught his bank account at just the right time to remove the remaining money.

Dave sat alone in his bedroom with no cash trying to work out how two bald tyres could have cost him £350 and a staggering £275 in interest and charges.