|Council urges borrowers to show caution
Wigan Council is advising borrowers to consider their options carefully before signing up to loans from payday lenders.
Their cautionary advice follows a warning by the Office of Fair Trading (OFT) which recently opened formal investigations into several payday lenders over aggressive debt collection practices as part of a wider review into the industry.
In late November, the OFT wrote to all 240 payday lenders highlighting emerging concerns over poor practices in the sector. In particular, the OFT expressed concerns about the adequacy of checks made by some lenders on whether loans will be affordable for borrowers, as well as the frequency with which some lenders roll over or refinance loans. The OFT is also looking into the lack of moderation shown by some lenders when borrowers get into financial difficulty.
Julie Middlehurst, Wigan Council Trading Standards Manager, says: “Whilst payday loan companies offer a convenient service which may be of advantage to some borrowers, the interest rates they charge can be significantly higher than typical high street lenders such as banks and building societies.
“The Office of Fair Trading report shows that a large number of payday loans are not repaid on time and incur considerable charges. Some of these companies also employ disarming sales techniques which target the most vulnerable.
“I would urge anyone thinking about taking out a payday loan to make sure they fully understand the costs involved to ensure that they can afford to repay it.”
Cllr Kevin Anderson, Wigan Council cabinet member for communities says:
"Credit Unions offer an alternative solution to your problems and Wigan Borough has two. Unify Credit Union based in Ince and Leigh and Welcome Credit Union based in Wigan market hall.
"Both are savings and loans co-operatives which can be accessed by anyone who lives or works in the borough of Wigan. By saving with them, members build up a credit history and can then go on to benefit from low cost loans.
"Credit unions consider each loan on an individual basis even if you are on a low income or have a poor credit history.
For further information on Unify you can call 01942 701706, or visit www.unifycu.org
For more information about Welcome Credit Union you can call 01942 828702 or visit www.welcomecreditunion.co.uk
If you are struggling to repay debts, you can seek confidential help and advice from Wigan and Leigh Citizens Advice Bureau on 0844 826 9713 or visit www.wigancab.org