An increasing issue in the UK and across the European Union is the growth of high-risk credit and short-term loans, often called “payday loans” as they are marketed to give people an advance until the end of the month when they are paid.\u00a0 These services are generally aimed at the poorer members of society, who are unable to take out longer-term loans due to poor credit histories, and who are most likely to need fast access to money to pay bills or buy essential goods.<\/p>\n
While these services provide a lifeline to some, this comes at a cost.\u00a0 The major warning coming from companies like North Shore Advisory<\/span><\/a> is that, the interest rates charged on these loans is generally very high, to offset the risk to the loan provider and the short period of time the loan is taken over.\u00a0 A loan from http:\/\/www.wonga.com for \u00a3200 for fifteen days results in a total payment of \u00a3235.90.<\/p>\n Paying \u00a335.90 to get access to money to pay for food may seem fair, but as stated above these description<\/a> loans are aimed at the poorest in society, to whom \u00a335.90 may represent a significant sum.\u00a0 It is likely that a number of those taking out this type of loan will find it difficult to pay off the full loan at the end of the period, and companies exploit this by offering further loans to cover the fees, and increasing the amount that can be borrowed.\u00a0 Therefore, individuals can find themselves trapped in a spiralling debt problem, having to take on an increased loan the following month to pay off not only the \u00a3200 borrowed but also the charges of \u00a335.90.\u00a0 Borrowing \u00a3236 for fifteen days would cost \u00a3277.23.\u00a0 Borrowing \u00a3278 for fifteen days would cost \u00a3325,44.<\/p>\n There have been a number of campaigns<\/a> launched to spread awareness of how personal installment loans<\/a> can lead to long-term debt difficulties.\u00a0 However, this spiralling debt issue does not only apply to individuals.\u00a0 Entire countries have borrowed considerable sums and must maintain interest payments in order to remain solvent.\u00a0 The US, for example, must pay over $400 billion<\/a> in interest each year – or borrow further sums to pay this off.\u00a0 In some cases, countries have found themselves unable to pay the interest or repayments needed, where the debts have become a large part of GDP, and have needed international bailouts<\/a> to continue.\u00a0 Debts of a number of developing countries have been wiped as it was recognised that interest payments were preventing them from growing and paying off the loans.<\/p>\n How can individuals or countries escape the debt spiral?\u00a0 Moving to lower-priced finance, with lower interest rates, should be a first concern; spending (and therefore borrowing) less is also crucial.\u00a0 However, convincing the electorate of a country of the need to implement such cost savings can raise its own political problems …<\/p>\n","protected":false},"excerpt":{"rendered":" An increasing issue in the UK and across the European Union is the growth of high-risk credit and short-term loans, often called “payday loans” as they are marketed to give people an advance until the end of the month when they are paid.\u00a0 These services are generally aimed at the poorer members of society, who … <\/p>\n