Payday loans lead to debt spiral, warns Shelter

Wednesday, 4 January 2012 11:47 AM

High-interest ‘payday’ loans are being taken out by desperate Brits to pay essential house bills. Almost one million people have taken out a payday loan to help pay their rent or mortgage in the last 12 months, according to a report from Shelter.

They also estimate that almost seven million people in total are relying on credit in some form to help pay their housing costs, using payday loans, unauthorised overdrafts, other loans or credit cards.

High-interest loans can result in a debt spiral and Shelter warns many have ended up homeless after being unable to keep up with mounting payments.

Campbell Robb, Shelter’s Chief Executive said: “These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home.

“Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable. It can quickly lead to debts snowballing out of control and can lead to eviction or repossession and ultimately homelessness.”

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