Sara Routhier, Director of Outreach and Managing Editor of Features, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overw...

Full Bio →

Written by

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

Full Bio →

Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Mar 28, 2012

Advertiser Disclosure

Advertiser Disclosure: We strive to help you make confident loan decisions. Comparison shopping should be easy. We are not affiliated with any one loan provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about loans. Our goal is to be an objective, third-party resource for everything loan related. We update our site regularly, and all content is reviewed by experts.

Payday loans and the problems they cause are not exclusive to the United States, as the United Kingdom has found itself in a heated battle with the short-term financing lenders that are popping up all across their nation.

“I couldn’t tell anyone—it swallowed me up whole,” said Steve Perry, a 30-year-old British administrator who took out a single payday loan that ballooned into a $34,800 debt obligation within just 18 months, reported Outcome Magazine. “I sat in my car and cried my eyes out.”

Perry had never heard of payday loans, but he needed some extra cash for a weekend trip, he came across this short-term lending service online.

The U.K. has seen this type of borrowing increase dramatically within the last few years. The statutory watchdog Consumer Focus told Outcome Magazine that the number of payday loan vendors in Britain quadrupled between 2006 and 2009. During those same years, over 1.2 million borrowers took out an estimated £1.2 billion—the equivalent of $1.9 billion.

“We’ve got hundreds of thousands of people who use payday loans really successfully,” said John Lamidey, chief executive of the Consumer Finance Association, a trade association that represents U.K. payday lenders, as reported by Outcome Magazine. “[Borrowers] know up front how much it’s going to cost… it’s so simple, so easy and people like it.”

Lamidey says the borrowers don’t have problems with payday loans, but instead campaigners do—those looking to steer the public approval spotlight onto themselves.

One borrower named Howard told Outcome Magazine that he took out a meager £250 payday loan, and has been forced to roll it over every month since, now struggling with £800 bills. He approached his lenders about establishing a manageable repayment plan, but none wished to work with him.

Now he fears he will lose his home.

Lamidey claims lenders responsible for propelling individuals down these debt spirals are rogues and not true representations of his industry. He believes these rogues will inevitably go out of business.

Since Perry fell into his massive debt trap, he’s slowly begun to regain control of his life.

He now fights against the payday loan industry and is working with other consumer advocated to establish stricter short-term lending laws. He is seeking to limit the amount of rollovers, the relaxed lending standards, and the amount of interest that these lenders can charge.

Due to sharing his story with the media, Perry has also found his payday loan lenders have grown far friendlier—some even cancelling his remaining debts.