8 payday loans, £7,000 in debt

The Office of Fair Trading says payday lenders aren't checking whether customers can afford to pay the loans back. Here's an example...

Meggan is 21 and £7,000 in debt to payday lenders. She first started taking out payday loans when she was just 19. She's had 8 and is still trying to pay off 4 of them.

Why did you start taking out payday loans?
"I felt I wasn't getting paid enough from work. I didn't have enough money left over at the end of the day to go out with friends, to go shopping, day trips, holidays...so I took payday loans to cover the cost."

How easy was it?
"Really easy, just go online. I just sit on my phone half the time, just type into Google: payday loans. Just click on each one, find out the one where you pay back the least, hopefully, then just apply. Bank details, passport number, driving licence, that's it.

I spent half the year with a really bad credit rating and they obviously didn't check because I had the money within an hour sitting in my bank account."

What were the signs with you that they shouldn't have been lending to you?
"Defaults mainly, missed payments, late repayments of credit cards, storecards."

They should have seen all of those things?

"Mobile phone contracts, late payments on those - they should have all shown up.

I think they should have done further background checks just to make sure, checked your employment, checked your bank status, just generally check your credit rating to see that you do pay back and to measure the amount that you've got going in and coming out by the end of the month.

It was quite hard, it was difficult opening all the letters, threatening defaults, threatening to take me to court, threatening  bailiffs. It was quite scary, being quite young as well, not always being at home, being away with the job. I would come after being away finding letters from 3 or 4 weeks, opening them and saying I don't want to read these."

You borrowed the money, didn't you?

"I borrowed the money so it is fully my responsibility to pay the money back. However, the contract's not always as clear as it might be and they're popping up on TV adverts here and there just making you think I'll just have a look, just apply, it can't do any harm. But you don't read the interest rates - the interest is sky high."

How badly does it affect you?
"The stress is quite hard, obviously opening the letters, and worrying constantly. Sometimes I'd go to sleep and think oh no I got to pay this one and that one and I've got to borrow money to pay that one. You just lay there late at night worrying  - what if a bailiff comes round, what if I get a CCJ? Where am I gonna get the money from, what will I do on payday?

There should be harder credit checks, especially for a young person as well. Not many young people are earning a good wage to be able to take payday loans out here, there and everywhere. So they should be credit-checking properly, thoroughly, as well as full background checks. It shouldn't be instant within an hour. 60 minutes isn't enough to check on somebody that they're worthy of borrowing anything from £100 to £1,000."

If you need help dealing with with payday loans, National Debtline is a good place to start.