The housing charity Shelter has said that nearly one million high interest payday loans were taken out over the last year in order to pay the rent or mortgage.
And almost seven million people are using loans, payday loans, unauthorised overdrafts and credit cards to fund their day to day living costs.
This, says the charity, shows “…the spiral of debt that people are falling into in order to keep a roof over their head”.
The result says Shelter, is the risk of homelessness for many people who are finding it very difficult to keep pace with their household bills.
Shelter’s Chief Executive, Campbell Robb, said “These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home. Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable.Â It can quickly lead to debts snowballing out of control and can lead to eviction or repossession and ultimately homelessness. Every two minutes someone in Britain faces the nightmare of losing their home. We urge every single one of these people now relying on credit to help pay their rent or mortgage to urgently seek advice.”
As Martin Lewis of MoneySupermarket.com points out in the Express, many of these payday loans charge extortionate interest in the region of 4,000%! So, not only is the loan extremely expensive if you cannot pay it all off the interest will roll up at an alarming rate until the original amount loaned is dwarfed by the accrued interest.
The message from Shelter is ‘Don’t let debt put your home at risk’. If you are experiencing difficulty visit their site for more information and links.
Many people rely on credit to buy items like cars and electrical goods and some need it to buy less expensive items like clothes and shoes. With the economy still on the slide, rising prices and taxes as well as high inflation we can expect to see people needing credit more.
But of course the mainstream lenders are not lending. So many are forced into the arms of the loan sharks thinking that if they could just get through this month then it will be alright.
After all, what do you do? Not buy food or not pay the mortgage? Or try and hang on for another month?
But anyone finding themselves in this position should seek expert help before clutching at the straw of a payday loan to service a priority debt like rent or mortgage.