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Short-term loans quadrupled

Between 2009 and 2010 the number of so-called payday loans and short-term loans quadrupled in the UK as consumers become more and more desperate for finances. These are the type of loans which are usually no longer than one month in duration and are seen as a short-term support for those involved. But is it really cost effective to take out a short-term loan?

In a perfect world no doubt every consumer who has considered a payday loan or a short-term loan would rather look elsewhere for better rates. However, as more and more people in the UK see their credit rating heading south and many financial avenues closed to them, for a growing number of people there are few choices. While payday loans and short-term loans are heavily regulated in the UK the cost of these particular financial instruments is far higher than most traditional loans.

As a consequence, those who are struggling to make ends meet are now paying out more and more of their money to cover interest payments on the short-term arrangements. The number of people actually living hand to mouth in the UK has increased massively during this recession and will have a detrimental long-term impact upon many family incomes.

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