Twinflower Is it truth that they lead to a debt cycle?
Yes, it is, without a shadow of a doubt. People who literally have nowhere else to turn take out these loans, often without understanding the exhorbitant rates of interest, or knowing they will have to make massive repayments, but seemingly having no other choice. I cannot understand why the government doesn't legislate against this 'daylight robbery'.
I agree with M0nica, I think that such loans should be made illegal and/or interest rates should be capped. A much more affordable alternative to a payday loan is a loan from a credit union. There’s a cap on the amount of interest they can charge – 3% a month or 42.6% a year APR for England, Scotland and Wales, 1% a month or 26.8% APR for Northern Ireland.
Gilly, some local authorities do give loans under exceptional circumstances, as do a few other organisations, but these are generally not publicised for fear of lenders being overwhelmed. When people are desperate they do what they need to do in the moment; robbing Peter to pay Paul is sadly how many families survive.