More seek help over loans

Makerfield MP Yvonne Fovargue
Makerfield MP Yvonne Fovargue

MORE Wiganers are turning to controversial pay day loans as a way to pay for the rising cost of living.

New figures from StepChange Debt charity reveal that in 2012, 644 people in the borough contacted its helpline, which was up from 575 in 2011.

The average pay day loan debt of those seeking help reached £1,657, but the average monthly income of a client with pay day loans is £1,320 per month, meaning borrowers are being left in a position where monthly repayments would leave them with no money for living expenses and push them further into debt.

And when taking all debts into account, they owed on average £14,940, which is less than the £16,925 in 2011.

This is consistent throughout the country, as lending criteria has been tightened by banks during the credit crunch.

Delroy Cornaldi, StepChange Debt director of external affairs, said: “With household finances increasingly under extreme pressure, many face the unenviable choice of using pay day loans to make ends meet.

“While recent actions by the Office of Fair Trading (OFT), including the revocation of a lender’s licence and the proposed referral of the industry to the Competition Commission, are welcome news for consumers, there is still widespread problems across the payday loan sector.

“The lenders and their trade bodies must now show they are committed to reform and the enforcement of their codes of practice.”

Makerfield MP Yvonne Fovargue has been working across the borough to discourage payday lending.

She said: “There has been a huge explosion of pay day lenders over the last 10 years and as living standards are squeezed, more people are turning to them for everyday living expenses often taking out multiple loans and rolling them over many times causing a relatively small debt to become a huge unmanageable problem.

“I would urge people to seek help from a free debt advice agency like Stepchange or Citizens Advice at an early stage as borrowing more from these lenders for everyday living expenses simply leads to falling further into debt.

“The Government must curb the worst practices as I don’t believe companies will clean up their act voluntarily.”