Since the onset of the credit crunch and banking crisis in the UK, it has become increasingly more difficult for someone to be accepted for the personal loan they require from a traditional route, such as a bank or building society and this has driven many borrowers to look for alternative types of loan.

One particular type of personal loan which has seen huge growth amounts recently, has been that of Pay Day loans, which are designed as short term loans for small amounts, to see someone through to their next pay day.

This type of loan is a particularly expensive way of borrowing money and although the charges are not too bad if the loan is repaid within a month of being taken out, many individuals are now using Pay day loans for long term borrowing needs.

The number of Pay Day loans being taken out has quadrupled over the course of the past two years, as more and more individuals are unable to get the bank loan they require and the Citizen’s Advice Bureau (CAB) have called on the government to introduce new, tighter rules regarding these loans, due to worries over the potential for unmanageable expensive loan debt problems they could cause.

Pay Day loans are undoubtedly an expensive way to borrow money and can lead to severe debt problems if they are not paid off in the time in which they are intended and the government has looked into changing the rules regarding Pay Day loans with things like placing a maximum cap on the interest rates which may be charged.

However, the government are concerned that this could cause further problems for the very people it is trying to protect, as tightening the rules on Pay Day loans could push some individuals into the hands of illegal loan sharks.

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