The Consumer Credit Counselling Service, have recently reported a threefold increase in the number
of people applying to them for help with payday loan debt. Many companies within the payday
loans industry do not file customer borrowing information with credit reference agencies, which
makes it possible for customers to take out multiple loans. The net result is more people than ever
accruing unmanageable debts, and with some payday loan companies charging APR rates of over
4000%, it’s not difficult to see how damaging this kind of multiple debt can be.

So how can you avoid falling into a payday loan debt trap?

Ask yourself if a loan is absolutely necessary. If you are borrowing money to cover essential expenses
then you probably do need a loan. But if you are simply borrowing to fund non-essential items, then
you should really be questioning your decision to take out a loan.

Do not take out multiple loans. Payday loans can sometimes be useful as a short stop gap if there
is no other choice, but taking out more than one payday loan at a time will lead to even greater
financial problems.

Always check that the lender you are applying to runs credit checks. A responsible lender will not
allow a customer to borrow if they cannot comfortably repay their debt.

Consider other types of loan from lenders who do not charge such a high APR rate. Social lenders
and Credit Unions offer far better terms.