Payday Loans During COVID-19

Payday loans industry during Covid-19

Payday loans are credits for small sums of cash mostly £100 or less. Customers usually turn to Payday loans when they’re broke, in debt or don’t have enough money to see them through until the next payday. They usually include high interest which is why there is a lot of bad press surrounding the word.

How has COVID-19 impacted customers and Payday loan companies?

With the global pandemic currently ongoing, Industries, companies and individuals have all felt the impact on income/wages.

With the current furlough scheme, individuals are only being paid 80% of their wages which are funded by the government so for example, If you were on a monthly wage of £3000, you’d only be getting paid £2400 per month and £600 is a large wage decrease when your mortgage, phone bill, car insurance etc hasn’t also dropped by 20%

So where have people turned to? A statistic showed that from October 2019 – October 2020 there has been a 790% increase on people taking out payday loans to cover bills for the loss of income they haven’t been receiving.

How have Payday Loans companies reacted during COVID-19?

The Pandemic has impacted every industry and company but with a few statistics, we can discover how Payday loan direct lenders have responded.

· Within 2 weeks, £349 billion had been paid out in loans Worldwide.

· A further £310 billion had been requested for funding but was nowhere to be seen.

Payday Loans and their Customers

With the strains on finances due to the pandemic and with repayments on loans, there has been some help at hand.

As of the 27th April, 2020 payday lenders must offer payment breaks to customers that have been financially impacted by the pandemic.

How do you do this?

If you are struggling with financial difficulty and making repayments to your lender don’t fret. You can contact them via their contact details (which will always find on their website) and explain your situation. They will be able to offer you a one-month payment holiday which you will not incur any extra interest.

You can then discuss a plan to bring yourself back up to date with the payments and your lender will usually be lenient with this. You can either split the one payment into your next payments for roughly 6 months or you can add an extra month on your payments so it will extend the length of your loan by one month.

Getting the support, you need

If you’re an individual with existing debt issues, payment holidays with unlikely not be enough to fix your longer-term issues.

If you feel like you are struggling with debt and can’t see the end of these issues, then our website also has a blog which can help you with advice on Debt Management Organisations and Charities

who will be able to support you as much as they can? You can read that blog Here