Payday lending is just a form of credit where in fact the borrower provides the creditor authorisation to make a computerized withdrawal
from their banking account. This is used as security for a short-term loan to be repaid, an average of, on the next payday.
Payday lending in the united kingdom
Pay day loans are an established type of lending in the USA plus they have now been growing fast in the united kingdom market within the
last five years since they offer a relatively little bit of cash (usually as much as £500) for a brief term, around 2 weeks
(or until ‘payday’). The providers charge a fee for the loan usually expressed as a flat fee per £100 borrowed - often
Payday loans are now a rapidly growing industry in the United Kingdom, with four times as many individuals using the loans
last year compared to 2006. In '09, 1 ) 2 million people took out £4. 1 million in loans, with total lending amounting to
£1. 2 billion (1).
In britain, cash advance borrowers sign up for typically 3. 5 loans a year and the common size of an online payday loan in '09
was around £294 (1). There are no restrictions on the interest rates cash advance companies can charge, however they
are expected legally to mention the effective annual percentage rate (APR).
Lately the marketplace for payday loans has growth rapidly, specially with online loan providers. Research by the
Office for Fair Trading (OFT) suggests the demand for payday loans could rise steeply in the foreseeable future (2). Utilising the figures
from this research, IRN Research predicts the number of borrowers could potentially rise by 40-45 per cent
in the coming years (3).