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The Growth Of The Payday Loan Market In The Uk
It has always been the case that the UK has tended to follow trends that began in America, albeit very often with a delay of several months or years. So too it is proving with payday loans. Five years ago these loans were increasingly commonplace in a saturated US credit market but they were hardly heard of in the UK. Fast-forward to today and the rise of payday loan lenders in Britain has been staggering.
There are now an estimated 30 companies all competing for this lucrative and growing market with even more due to enter soon. Each lender in turn offers various plans to suit a variety of Borrowers so the options available to the consumer looking for a payday advance loan have multiplied. The public’s awareness of the product too has risen. Gone are the days when it was a clandestine market spoken of in hushed tones with mumbling references to APRs, now firms like Wonga are unashamedly pumping their adverts across the TV and radio airwaves and even enjoyed a highly successful sponsorship of last year’s darlings of the Premier football league, Blackpool!
With the increase awareness has come increased acceptance. ...
... Once upon a time the thought of taking a payday advance loan had a very negative image. The British don’t like to discuss their debts or finance like the Americans but this particular kind of loan had a perceived special stigma as it seemed to represent an inability to balance books and make prudent purchases measured to one’s income – a reflection of the cultural thrift that had lingered in the UK probably since wartimes and was only properly dispelled by the economic policies of the Thatcher government in the 80s. Once the nation started borrowing to buy their homes, debt became a more conscionable situation and therefore as we rushed into a new millennium with sub-prime borrowing taking off, it was also only a matter of time before payday loans lost any negative connotations. This is certainly the case today.
The current generation of young workers think nothing of paying to get their paycheques in advance. There is a culture of immediacy which demands that rewards are not something that are earned after a period of effort, rather they are an entitlement and this generation does not want to wait. This culture is also complimented by the increasingly material nature of our society so it wasn’t hard to foretell that a market in loans that allow you enjoy your payday today with out waiting was always going to do well.
Are there drawbacks? Well certainly the loans are expensive but it is also worth remembering that we are talking about short term advances in small amounts so relativity is key. One should also bear in mind that each time the Borrower repays, they are enhancing their credit record. Not all bad then but, like all borrowing, best used in a measured manner and only when appropriate.
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