“Thinking of getting out a payday loan? Read this before you do…”

I have always refused to take any blog advertising from payday loan companies. People come to this site to save money, not to tip headlong into a hideous debt spiral. The average income for a payday loan customer is £18,000 – way below the national average – and the interest rates and penalty charges can be crippling. Small wonder that one in three payday loans is used to pay off another payday loan.  I believe that these companies prey upon the poor, the vulnerable and the ignorant.

Ami, a 22-year-old hospital care assistant, has been blogging about her experiences with payday loan companies. Most of her monthly income is spent on servicing payday loan debt. Ami kindly agreed to let me post an edited version of her tale here.

I wish Ami all the best. She doesn’t pull any punches about the financial mistakes she has made in the past, and I imagine this was a very difficult post to write. But you know what they say: “Don’t get mad – get even!” It sounds to me like Ami is now doing both, not just with the payday loan companies, but also with her personal finances… 

Ami’s Story: A few months after getting my full-time job (with good pay for a 19-year-old party girl), I noticed that I was lacking the cash after going out and buying new clothes every month. I was going out most weekends and had just passed my driving test. I had brought a laptop on finance, and started to pay rent at home.

Things soon started to mount up so that when it came to the second week after payday, I was skint. I had no petrol to get to work, my car needed a new tyre, and I couldn’t miss my payments on my insurance.

£150…

After doing a bit of research online, I found a website that would lend you some money until your next pay-day. Brilliant! I could still go out and do the things I wanted to do, but I wouldn’t have to worry about it until the next month. My first payday loan was £100, but with the interest, obviously I had to pay back more, around £150. That stung my bank balance.

£450…

Lets skip a few months of me being greedy and borrowing more money. My first real problem was when I didn’t have enough to repay a £400 payday loan. I remembering thinking, “What am I going to do? I don’t have £400 and where can I get it in three days?” So I went to the trusty bank. I extended my overdraft to £450. A couple of months went like this, but I was borrowing more from the bank as well as the payday loan company. I was getting charged for my overdraft and missing payments to the bank because I couldn’t afford them.

£1,000…

The next thing I knew, I owed the bank more than £1,000. It may not seem a lot to some people, but as a 19-year-old, I thought my world was ending. I had never experienced this before. One night, I stayed awake until 5 am crying because I didn’t know what to do.

In the morning, I sat down with my mum and I told her exactly what I had been doing. I may have been 19 at the time, but she still bollocked me like I was a seven-year-old. Luckily, she helped me plan out what to do so I called the bank and set up monthly payments. She changed my login information to the payday loan company website.

Now, I had to pay the bank, I had to pay rent, insurance, my nan for my car, petrol, my laptop and still manage to have a social life. Stupidly, you would have thought that this would have stopped me getting out more payday loans, but no. I went onto my mum’s email, reset my password and away I was again.

The next year carried on like this: taking out loans, paying them back, then not having enough money for the next month so having to get another payday loan with more interest just to see me through the month. I had kept this a secret from my mum, and the rest of my family who didn’t have a clue what I was up to.

My dirty little secret.

Now I was 21. You would have thought I would be more grown up, learn my lesson and be more sensible with my money. I would love to answer this question with a yes.

I found a payday loan company that not only lent me the money, but put the money in my bank within half an hour and let me add more cash if I needed it in the same month!

At this time, I was paying off two cars that I didn’t have. (The first one had broken down beyond repair and the other one, well, it decided it wanted to go for a roll in the field on my way home from a night shift.) I started asking to borrow money off my dad. Every month, without fail, I would pay back my payday loan, take out another one, then be skint by the second or third week and text my dad, who would very kindly agree to give me some money. I tried my best to pay back my dad as well as everything else. It felt like every payday, I wouldn’t see a penny of the money I earned. It was all borrowed.

At this time, my dad started to catch on that I had no money and I came clean to him. Dad was very understanding, but still gave me an earful for being so stupid. It wasn’t long until my mum, nan, stepdad, brother and his girlfriend found out.

I felt like a heroin addict who had just been found out.

So much guilt and shame. There were countless times when I was in floods of tears, arguing with my mum and stepdad about my money. All because of these stupid payday loans. Near enough every time I went on the internet, my mum was asking me if I was getting out another loan. I began lying. I couldn’t stop.

Everyone tried to help me. My brother’s then-girlfriend sat down with me to do a spreadsheet of all my outgoings, all my income, and we tried to budget my money. I followed it. For three days.

My dad even sat down with me, and gave me the chance to get out of all of this silly, silly debt. I promised him I wouldn’t get another payday loan out. The fact that I broke that promise still makes me feel like shit today.

Now I was lying to everyone.

The one thing I cannot stand other people doing, I was doing myself. All because of money. I didn’t want them to be angry with me or disappointed because I hadn’t sorted myself out. I was 21. An adult. I should have learned from my mistakes

Now I’m 22. Still taking out payday loans. Still lying to people about them. The only person with whom I have been completely honest is my fiance, Robbie. He’s tried to stop me taking them out, and I appreciate the fact he has, but it hasn’t stopped me. My dad has stopped lending me money. As he said, “The Bank of Dad is now closed”.

I was signed off work for a month with depression, and I think that this has something to do with it. I am constantly feeling stressed, and angry at myself for getting myself in this mess.

£2,000…

Currently, I owe nearly £2,000 to payday loan companies. And yes, that’s plural.

Last payday, after doing the food shop and getting a couple of Christmas presents, I was left with £30. I have exceeded my limit with both the payday loans companies with whom I have accounts. I can’t ask anyone to lend me the money.

A couple of weeks ago, I attempted to get another payday loan with another company. I know: you are probably screaming at your screen. But this money was needed urgently. This company finds loans for people with bad credit. They took my details. They found me a loan.

I got off the phone to them and thought to myself, “What am I doing? I can’t do this anymore. This is getting out of hand”. I called them back straightaway and cancelled my application. They accepted it. Good. This payday, I noticed that £79.99 had come out of my account, and guess who took it? That’s right: the payday loan company.

Robbie immediately called them to complain and to get refunded for the money that they did not have permission to take. The guy on the other end was snotty, rude and arrogant. He stated that we should have read the small print and declined to let us speak to his supervisor, and declined to give me a refund. So I emailed them. They told me that I needed to cancel the loan within seven days of it being processed, and that they would not refund me. This infuriated me! How dare they take my money that I have earned! I have filed a complaint with the Financial Ombudsman as I have read that this company has done it to hundreds of other people.

And that’s when it hit me.

These past four years, that’s what the payday loan companies have been doing to me. They have been taking my hard-earned money with their extortionate interest rates and charges. No more. I have emailed both companies with whom I have loans, and I have explained that I cannot afford the £2,000 next payday. I have set up a payment plan with one, and I am waiting to hear back from the other. It’s going to take me four monthly payments of £204 to pay the first, but I am guessing it’s going to take me a lot longer to pay back the second. After I have paid them both off, there is not a chance that I am ever going to get a payday loan again. Looking back on it now, I want to slap myself for being so greedy that I took out the first one.

So there you go, now all of my friends and family reading this now know the truth. This is why I am always skint. I just hope people learn from my mistake.

My advice to you is this: no matter how hard up you are, do not, ever, take out a payday loan.

Image credit: National Maritime Museum.