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Are Short Term Loans Really the Route to Evil?

Written By On 12/10/2013

Southwark council is the latest to prevent payday loan companies from opening within their borough. The local authority is to introduce tougher restrictions in order to stop units on their streets from changing their licences easily to incorporate any type of lending or betting.

Nevertheless the Labour borough presently leases out seventeen of their properties to bookmakers plus another to a pawnbrokers who all trade legally.

This comes amidst recent data from the Debt Advisor Centre reporting a large percentage of short term loans being taken out are for people using them to help repay other debts they have accumulated. Londoners appear to be the biggest culprits choosing to do this.

Reasonable logic tells us that it makes no sense to borrow more money in order to satisfy an existing loan as it can only exacerbate the problem. But it becomes blatantly obvious that people applying for these loans are feeling under immense pressure and do not always think as clearly as they might have done in normal circumstances.

But not all experiences of payday loans are bad. Uswitch reported their findings a couple of months ago. It stated that most people that they surveyed who had taken out a payday loan were satisfied and would have no hesitation in using one again.

Payday loan company Wonga's chief executive South African born Errol Damelin believes these loans will help bridge the gap between the rich and poor divide. He says

Credit in consumer society is absolutely critical. Without it, you have no social mobility.

So as in all warps of life we have extremes. Many argue that these types of short term cash advances are bordering towards evil whilst many consider it purely as a convenient means to an end. So should we throw the baby out with the bathwater as the saying goes!