If you stroll down your local High Street, whether in Pembrokeshire, Carmarthenshire, Swansea and Cardiff you will see at least two thriving shops from one sector taking up retail space – the payday loan companies.
I first came across payday loan companies in Florida back in 2006 – where, if anything they are even more prevalent than currently in the UK.
My Google search just showed that a typical APR for a payday loan is 1,737% – yes that’s one thousand seven hundred and thirty seven per cent. When most businesses complain if they pay 4% above base you have to ask why anyone would take out such a loan. But assuming that the market is always efficient and that payday loan companies are fulfilling a need presumably consumers are turning to payday loans because they cannot access funds from traditional High Street lenders, and presumably they are desperate.
For consumers who have such pressing debt problems I suggest there is only one debt strategy – and that is toreduce debt rather than service it at an annual interest charge of 1,737% APR!
There are numerous debt solutions available. These include debt relief orders, bankruptcy, liquidation, administration, IVAs and debt management. Some may wish to avoid the perceived stigma of turning to these solutions. However, the thought of reducing debt, possibly with the added advantage of a tax holiday, is surely better than taking out a payday loan?
Alun Evans
Alun Evans is a partner at Bevan & Buckland specialising in tax, audit and debt advice. Alun is a chartered accountant and licensed insolvency practitioner and holds a consumer credit licence issued by the Office of Fair Trading to provide debt advice. Alun is happy to advise both existing and future clients in any of our offices – Cardiff, Carmarthen, Haverfordwest, Pembroke, St Davids and Swansea.
Bevan & Buckland Accountants Swansea Tel: 01792 410100
Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666
Bevan & Buckland Accountants Pembroke Tel: 01646 682383
Bevan & Buckland Accountants Carmarthen Tel: 01267 233115