Kirk warns of ‘payday’ loans misery
People are being advised to be careful with money and avoid payday loan companies.
HARD up and desperate residents across Levenmouth are amongst those turning to payday loan companies to help them out of the financial mire.
Considered to be one of the main winners of the credit crunch, legally legitimate payday firms offer short term loans to almost anybody – but at crippling rates of interest.
Their rise in popularity has been helped out by a reluctance by high street bank lenders to offer cash loans since the financial system hit difficulty.
The Church of Scotland General Assembly this week condemned the companies.
Professor Charles Munn, who chaired a Kirk commission on economic activity, said it was “pretty clear” the companies were doing a “great deal of damage” in society.
This has been backed up by the Methilhill branch of the Kingdom Credit Union, which told the Mail it’s increasingly being asked by Levenmouth residents to help them out of the mess caused by taking on too much short term, high-interest, payday loan credit.
A spokesperson for the group, which is a not-for-profit organisation where members’ savings are used to fund loans to others at reasonable rates of interest, told the Mail: “We have had numerous customers coming in to ask us to help pay these loans off.
“People are taking them out because it’s so quick and easy to do and the banks don’t offer credit like they used to.
“But what’s happening is that people are not able to pay them off and keep on deferring them.”
When a payday loan is deferred, the outstanding balance remains, while quite often the customer will then take out added credit from the same firm on top of the existing loan.
Prof Munn added that credit unions and mutual associations should be encouraged to take the place of such payday lenders.
The spokesperson for the local union added: “Another thing with these companies is that they claim to be ‘payday’ lenders, but they’ll gladly accept people who are on benefits who may not be able to pay back.”
The Kingdom Credit Union also offers immediate loans to those on benefits, should an emergency arise.
Mail readers using our Facebook page have hit out at payday lending.
Liana Seath said: “People can learn to work for what they want, and parents could bring their kids up to realise that better.”
Colin Rollo added: “Please stay away from these modern day pirates.”
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Saturday 25 May 2013
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