As in the U.S., working Brits continue to increase their use of quick short-term loans against paychecks to help them weather economic conditions. Unemployment – incidentally a factor which precludes use of payday loans at home and abroad – will be at its worst in 17 years in 2011, according to a report by the Chartered Institute of Personnel and Development. The Institute says that 80,000 jobs in the private sector and 120,000 jobs in the public sector will be eliminated by the end of the year.
Unemployment rates at the beginning of the year were already at 7.9%, and the total jobless numbers put 2.53 million Brits out of work by the end of the first quarter. The increase in 2011 can take that percent up to 9% by December 2011.
Of those who still work, there remains financial stress, particularly where formerly two-earner households are now down to one working person. With costs of housing, utilities, food and insurance relatively constant, those families have taken a hit on their credit scores and consequently find it increasingly difficult to get loans and cash advances from traditional sources, credit card companies and banks. This has led to an increased usage of payday loans or quick short-term loans, which enjoy similar popularity in the U.S., Australia and Canada.
“It’s not like old days,” remarked one former HR professional. “If you had to stand on line in a payday loans store, you might not bother. But the online method of finding quick short term loans has made it infinitely more consumer-friendly and accessible.”
Indeed, those payday loans companies have improved the service offering to consumers in attractive ways. The online application is simple, with no faxing or paper documents required, and users spend only about 12 minutes per transaction. This compares to a two-hour average engagement in traditional bricks-and-mortar payday loans stores.
A spokesperson for the quick short-term loans industry said growth rates for all players are “robust,” but that should not be interpreted as saying borrowers are in economic straits.
“This is the new way to manage household finances during cash shortfalls,” he said. “Where previous generations just rang up charges on a credit card, these working consumers want to manage their debts over the short, not long, term.”Use of Payday Loans “Robust” Across the Pond