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Video: Payday Loans under fire in Salford
by Tom Rodgers
As Poverty and Homelessness Action week draws to a close, we take a look at the troubling world of payday loans. Shops are popping up all over Salford and Eccles promising quick cash with no credit checks. And through the national lenders who advertise on TV, you can even get money loaned by text. While payday loans are a very convenient, very effective way of getting cash quickly, the charges and penalties they impose if you can't pay straightaway swiftly spiral out of control. They're often aimed a low-income earners, people who have County Court Judgements against them, or poor credit ratings, and have difficulty getting loans through banks or credit cards. The Consumer Credit Act 1974 says that it's illegal for money lenders to charge 'extortionate' rates. But the law is unfit for purpose, it seems. Tom Tocher is the Chief Executive of Salford CAB. He says that his Eccles-based charity deals with over seven thousand cases of debt in Salford every year, and a significant proportion are problems with payday loans. And while these companies dispute the annual rates of thousands of per cent, interest rates ten times that of credit cards, sometimes at 200-400 per cent are still vast and we would argue 'extortionate'. This is especially true at a time when incomes are stagnating, inflation is on the rise, families are finding it harder and harder to budget, and interest rates are practically zero. Governments are hesistant to cap lending rates, as they say it will drive business underground, and force vulnerable people into the hands of unlicenced lenders, or as they're better known, loan sharks. But the problem is so bad that many are calling for tighter regulation of this murky and, some would say, entirely immoral industry. "I believe these companies are taking advantage," says Salford MP Hazel Blears. "When you have a situation where people are living day-to-day, robbing Peter to pay Paul, they're essentially saying that the poorest people in the most need have to pay the highest charges." "It's a two-part problem," agrees Tom Tocher. "Not only do you have extortionate lending, it's also difficult for local people to get access to reasonable credit." One part of the solution will be community lenders, or credit unions. We're lucky in Salford to have a city-wide union called River Valley, based in Broughton. If you have a 'common bond', that is, if you live or work in Salford, you can borrow money at entirely reasonable rates. This not-for-profit lender will be the focus of another SalfordOnline interview next week. Due to problems with spam only SalfordOnline members can now leave comments. Becoming a member of SalfordOnline only takes a minute, just hit the red Join Us button at the top right hand side of the page to create your Personal account. Got a news story? Need help with publicity for an event in Salford? Send it to newsdesk@salfordonline.com or call the SalfordOnline newsdesk on 0161 789 5377. |
