Sky-high interest rates
With interest rates are as high as 400% even the smallest of loans end up spiraling out of control. This then causes people to end up reliant on this type of loan to pay back the previous one in an endless cat and mouse chase.
Juggling other unsecured debts
People who use payday loans are often facing other financial problems – you don’t borrow money from a payday lender unless you’re desperate. These people may already be juggling credit card debts, personal loans, and other debts that make it harder for them to repay a lender charging such high interest.
Payday loan cycle
It’s not just interest and other debts that make it difficult to find your way out of a payday loan hole – it’s the combination of the two. The terms and conditions in payday contracts often leave people feeling trapped in a never-ending cycle of debt that they may never clear. This in turn causes people to fall into further poverty.