While the demand and need for payday loans in the UK was established some time ago, people still were reluctant to understand and accept the evolution of the payday loan industry, which ensures more protection to the borrowers as well. Research on the payday loan industry in the UK shows that a majority of the people in the UK use payday loans, reveals BBC news.
Credit Action which is a money education charity in the UK, is of the opinion that traditional banks can do more to supply people with credit, whereas the British Bankers’ Association says they are already doing as much as they can. They say, that every bank has to perform a risk assessment for a lending proposal, and it is not worth lending money if it will not be repaid.
Payday lenders offer people an alternative to apply for cash. They know that people who do not have perfect credit scores are high-risk borrowers, but they still provide them with a loan based on a simple eligibility criteria, and basic credit checks. This justifies their high interest rate. If people are still sceptical about these high cost loans, then they should consider the fact that payday loans are meant for a short term, and the interest rate will affect them only if they roll-over the loan. Even for these cases there are some lenders who offer flexibility in repaying a payday loan. Borrowers should carefully pick the payday lender or the loan product they want to use.