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Epsom and Ewell CAB warns about payday loans

Epsom and Ewell Citizens Advice Bureau is warning residents in Epsom and Ewell to think twice before they take out payday loans.

The CAB is seeing an increasing number of clients who have required help to sort out debt situations which have become more serious and complicated as a result of taking out payday loans.

Tom Sheriff, Bureau Manager, said "People are being drawn in by tempting headlines - 'Instant Decision. Apply Now' 'Cash in 10 minutes today' 'Borrow up to £1000 Online' but are often not aware that interest rates for payday loans are much higher than for traditional borrowing. Fixed fees can add to the cost and there can be high penalty charges for defaulting. There might even be charges for reminder letters. One payday lender was charging a representative APR of 14,348%, that is more than fourteen thousand percent interest."

The CAB has seen clients who were so desperate for funds that when they could not pay back their first payday loan, they took out additional payday loans as they were so easy to obtain. Eventually, they can get trapped in a circle of debt and the eventual repayments can leave them with no money for basics.

Sometimes payday lenders obtain repayment direct from customer's bank accounts. The Bureau has seen an example where a client had hundreds of pounds taken from their bank account leaving them unable to pay the rent.

The CAB advises people to ask themselves if they really need the payday loan before they take it out and to always check the small print. Before taking out a loan, people should make sure that they are able to meet the repayment.If the reason for the loan is because money is owed on a credit card, mortgage or rent, they should try talking to the creditor, landlord or lender first to explain the situation. They may come to an arrangement which makes the payday loan unnecessary.

If you are facing difficulties with your debts, including payday loans, please seek free and confidential advice from:-

  • Citizens Advice (drop in at The Old Town Hall, Epsom; see our Opening Hours for opening times; or call on 01372 237000 between 10:00 AM and 2:00 PM on weekdays)
  • National Debtline ( 0808 808 4000
  • Consumer Credit Counselling Service ( 0800 138 1111