Of course, individuals already had personal loans, bank overdrafts and similar plans available to them before the recession started but those who used such facilities were usually employed, had a mortgage and were not expecting to be made redundant any time soon.

By late 2010 however, things in the UK were looking much worse than had been expected and while those who were still employed were able to continue with their existing loans and mortgages, an almost inaccessible housing market forced many people into the private rental sector. Rents shot up and, to make matters even worse, large companies started shedding thousands of jobs. The end result of all this was that many people now ran the risk of defaulting on their loans and other financial commitments and, for those with less than perfect credit records, it became almost impossible to borrow money from the banks.

In America, payday lenders have been commonplace for many years and those lenders were quick to seize the opportunity presented to them in the UK. Within a very short period of time, “money shops” began to open on every major high street and payday lending exploded onto British society. Since then, many payday lenders have been accused of exploiting the poor and using questionable business tactics.

So are all payday lenders unethical, immoral and financially irresponsible? The answer is no. Some payday lenders, such as MYJAR are in fact extremely responsible and operate payday lending in the manner which was originally intended: as a very short-term loan. MYJAR’s interest rate is also competitive, given the market in which they operate and compares well with that of many other, less reputable lenders.

MYJAR also does credit checking to try to make sure that borrowers are able to pay back the loan and, whereas some companies add hidden charges that only become apparent later, MYJAR is totally transparent, so that their clients know exactly how much they will have to pay back and when. Some payday lenders allow loans to “roll over”, letting the borrower take out another loan just to pay off the money that they borrowed initially. This can lead to a spiral of debt that just gets hopelessly out of control. MYJAR do not allow roll-overs – they never have and never will. They also operate a graduated loans policy, meaning that borrowers cannot initially borrow more than £100 with a representative APR of 3943%.

As long as individuals use payday lenders for the purpose that was intended, borrowing a small amount of money until payday, the payday loan industry represents a useful source of credit for those who do not have access to the loans offered by major banks. Now, the government has also begun to clamp down on irresponsible payday lenders. Many payday loan companies however have a long way to go before they meet the ethical standards of MYJAR.

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