Middle Income Earners Turn To Payday Loans

While the perception is that payday loans were created to help low income earners survive until their next salary, figures just released by a major lender shows that 57% of thier customers had an annual salary between £25,000 and £50,000.

Loan amounts were typically between £200 and £300 and for around 10 days. Excessive bank charges for going overdrawn was the #1 reason given for taking out the payday loan.

Lloyds TSB for instance charge £20 per day should you go £100 overdrawn for 10 days meaning customers would have to pay back a total of £300 – the £100 they went overdrawn and £200 in charges. These are pretty much standard charges by most of the UK banks.

A payday loan of £100 for 10 days can cost as little as £10 if you are prepared to shop around and compare payday loans before jumping in and taking the first one you see advertised on TV. Even the most expensive lender will charge you around £25 – still a long way short of the bank charges you would face for being overdrawn.

Another reason middle income earners are turning to payday loans is the cost of personal loans from their banks – now at a record all time high of 12.5% which is a massive 25 times more than the Bank of England base rate which is set at just 0.5%

Payday loans are now seen as the convenient way to borrow small to medium sized amounts of money for the short term. The customer can apply from their home and often have the money in their bank account within an hour or two.

If you need a payday loan…

It is important you shop around. There are so many lenders moving from traditional secured loans into this market because the instant cash loans business is booming. This means there is plenty of competition for your custom and competition is good for the consumer so take advantage of it.

Too often we get emails from people who took out a payday loan with a lender simply because of their TV ad only to later find they paid twice as much as they needed to for their loan. If they advertise on TV they must be good is the way the logic works but it’s not always the case.

Wonga for instance are probably the most well known payday lender thanks to their aggressive advertising campaign yet once you look at the figures they are actually one of the dearest lenders in the UK.

A £100 loan for 30 days with Wonga will cost you £36.72 while the same loan with QuickQuid can be as little as £15

Other things to look for include checking your options if you can’t pay the loan back on time (read the small print) and do they charge you to have the money transferred the same day?

Take a look at our comparison chart so you can quickly see the difference between the various payday lenders by clicking here.