NEWTOWN is the pay-day loans hotspot for Montgomeryshire, according to new research.

More than 800 Newtown residents resorted to short-term ‘pay-day’ loans, while in nearby Welshpool more than £200,000 was lent by short-term loans providers in 2018, according to research by finance app Wagestream.

Despite research which shows that payday loans are often a measure of last resort for struggling households, the UK imposes no legal limit on the interest rates payday loan companies can charge, which can range between a “typical APR” of 1,355 per cent and can go as high as 4,000 per cent.

Powys County Council’s anti-poverty champion Cllr Joy Jones believes the actions of payday loans companies are “predatory”.

“People turn to these when they really despair and can’t see another way to pay their bill or get an item they need. They are preyed upon as often people don’t realise the extra costs they will end up paying and they run for so long that as people’s circumstances change they are often unable to make the payments,” she said.

“Anyone going for a payday loans is not in a great place or they would look to the bank or other lender who offer lower rates. This is modern day loan sharking and they are heartlessly making money on people who are already struggling,” she added.

The highest average loan amounts were recorded in Montgomery, where 131 loans totalling more than £40,000 meant an average sum of £326.87 was lent to customers.

Elsewhere in Powys, Llandrindod Wells residents paid £263,000 in fees and interest on 1,740 payday loans.

Peter Briffett, CEO and Co-Founder, Wagestream, said: “Payday loans are exploitative, ultra-high cost and plain wrong, so it’s frankly mind-boggling that these lenders are still able to prey on UK workers.

“Financial stress caused by the monthly pay cycle means people turn to payday lenders not out of choice but necessity, so it’s vital we replace this industry with something better.”

Citizens Advice Powys, who are based in Newtown, say it’s important for people who are struggling with debt to seek advice as early as possible.

“If you have taken out a payday loan and are struggling, it is probably a sign that you need help,” said a spokesperson.

“Don’t borrow more money to get yourself out of debt and make your situation worse. Don’t take out payday loans to pay off other debts. Contact an organisation like Citizens Advice that provides free, specialist debt advice.”

Dedicated organisations like Citizens Advice can help create a plan for people struggling with debt, they said.

“Each person’s case is a very individual situation and advice needs to be tailored to suit those needs. The earlier you deal with your debt issues the easier they are to deal with,” they added.