TAYSIDE RESIDENTS have been urged not to fall into financial oblivion at the hands of high-interest payday loans.
As the UK’s economic woes continue, it’s estimated that millions will consider such loans in the next few months.
Firms have seen profits surge over the past 12 months, but many have been accused of targeting the financially vulnerable, with annual percentage rates as high as 4,000%.
According to experts, as many as one in three may then be forced to take out a second loan to pay off the first.
Dundee City Council has already taken the step of blocking the websites of more than 100 payday loan firms from computers in libraries and council buildings.
The local authority has been leading a crackdown on high-interest lenders and its IT team are now in the process of sealing-off the websites.
Council leader Ken Guild said the local authority was “trying its best to block access to sites that promise solutions to people but bring only more misery and heartache”.
The move was designed to “discourage” people from using loan sites with “massive” interest rates.
While it is likely to be the sole local authority within Tayside and Fife to take such direct action, the issue is one of significant concern to all.
Perth councillor Alexander Stewart, who is convener of scrutiny for the council, has been highly critical of payday loan companies.
He has warned constituents to be on their guard from these short-term loan providers who, in some cases, charge what he said were “exorbitant rates of interest”.
“I am urging my constituents, some of whom are hard pressed at present, to stay away from any costly payday loan companies,” the councillor said.
“The temptation provided by slick TV and radio adverts will be there for many individuals, particularly in the run-up to Christmas when family finances can be stretched. My advice would, however, be to steer well clear.
“There are money advisers and the Citizens Advice Bureau should be the first port of call for clear and sensible advice.”
Citizens’ Advice Scotland chief executive Margaret Lynch said: “There is no doubt that the high interest rates associated with payday loans is a huge problem and has led many families into the misery of debt. Rates as high as 4,000% have a huge impact on people who are struggling on low incomes.
“CAB advisers see families every day who are struggling to make ends meet, many of whom feel they have no option but to borrow money, just to meet essential costs like rent, food and fuel.
“Last year the Scottish CAB service saw 50 new cases every day of people who had taken out a payday loan and were unable to keep up the repayments.”
Perth and Kinross Council’s internet access control blocks access to a range of website categories including but not limited to gambling, illegal drugs, adult material and hacking and phishing.
“While we do not restrict access to financial websites from computers in our public buildings, from a consumer advice perspective we would always encourage residents to shop around when considering taking on a loan or additional finance,” a spokeswoman said.
“We also have a welfare rights team who can provide advice and information on benefits entitlement and income maximisation and we are supportive of the development of a credit union for Perth and Kinross.”
A spokeswoman for Angus Council said there were no plans at present to block access to payday loan sites.
mmackay@thecourier.co.uk