Payday loans encourage irresponsible borrowing

Consumers need to take great care when considering taking out a payday loan, an independent financial advisor has warned.

Justin Modray, of candidmoney.com, described payday lenders as "little more than loan sharks in disguise".

He said that they should be taken out only if all else fails but, conceded that if they are used correctly they can buy a bit of breathing space.

"Provided you repay the loan within a month then payday loans can work as an absolute last resort, but use them to borrow beyond this and the interest will likely crucify your finances and spiral your debt out of control," he said.

However, Mr Modray said that he feels payday loans are far too accessible which promote irresponsible borrowing.

His comments follow new research from R3's Personal Debt Snapshot which revealed that 47 per cent of individuals are concerned about their debts.

The quarterly tracker of the nation's finances reveals a seven per cent rise in debt concern, compared to this time last year.

Moneyextra.com recommends you take independent financial advice before acting on any article

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2011-08-17 13:06:00 © Moneyextra.com