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ALTHOUGH their roots stretch back to 1930s America, the internet has revolutionised payday loans.
Hard-up people may previously have signed up with a doorstep lender or pawnbroker to tide them over until their next wage packet.
But dozens of companies – some of which hit British high streets in the mid-1990s – now offer almost instant credit online.
Payday loans are usually short-term and unsecured loans totalling a few hundreds pounds.
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Typified by snazzy TV adverts and the lure of almost-instant cash, the paperwork-free application process is all done online.
A total of 133 payday lenders are now operating in the UK, attracting £1billion of borrowing every year.
However, interest rates are often extremely high – and the penalties for missing repayments can be severe.
Many repayments are set up through a continuous payment authority, rather than a direct debit or standing order.
They allow the lender to take back cash of any amount direct from the borrower's bank account at any time.
If a borrower ends up struggling to meet scheduled repayments, penalty charges and interest rates can rocket – and take priority over other bills such as rent or council tax.
Although growing in popularity, the payday loans market provided just 0.5 per cent of the UK's overall unsecured credit last year.
For every £100 of unmanageable debt nation-wide, around £1.20 is owed to a payday lender.
The industry argues that, like the notorious double glazing salesmen of the 1980s, those flouting the rules are now being exposed.
One firm, MCO Capital, which traded as Help Loan, was last month shut down by the Office of Fair Trading and fined £544,000 for failing to check the identities of borrowers.
The company was duped by fraudsters who impersonated more than 7,000 'customers' – and then chased the identity theft victims for cash.