This report seeks to investigate payday lending in order to improve knowledge and understanding of this relatively new form of lending in the UK, and the benefits and risks associated with it for consumers, in general, and those on low incomes, in particular. The research seeks to address concerns that such loans are expensive in terms of APR, although high APR rates may be justified by the high cost of lending small sums of money, and that most borrowers are repeat borrowers. A central aim of the analysis is to understand who takes out payday loans in the UK, as well as understanding how payday loans fit into the market place alongside other forms of short-term borrowings such as overdrafts and credit cards. The research has indicated that the profile of borrowers in the UK is significantly different to that of borrowers in the US, where payday loans are a more established form of lending. In the UK, borrowers tend to be young adults (under the age of 35), single and without children. In contrast, in the US, borrowers tend to be older and have young families. Most users of payday lending in the UK are based outside of the South East and London, with the North of England and Scotland being home to most borrowers. The qualitative research found that many users of payday loan services are shocked at the cost, or feel ashamed or embarrassed at using this form of finance. Some short-term borrowers can find using payday loans a positive experience, provided the loan is paid off in the short term. Nonetheless, others, generally those on lower incomes, have a long-term negative experience. This is usually if they are rolling over a single loan, taking out multiple loans over a period of months or juggling multiple loans from more than one lender at a time. This can result in significant financial problems and emotional stress.