GREEDY lenders are exploiting struggling families by offering Christmas loans with crippling annual interest rates of 2,350 per cent.
Families hit by the credit crunch are turning to so-called payday loans because they cannot access extra money from high street banks.
National TV adverts for one loan firm hit screens last week just as Office of Fair Trading research revealed a worrying increase in expensive short-term borrowing. And last night there were calls for the Government to clamp down on the loan firms amid fears that thousands of families could be plunged into spiralling debt.
Liberal Democrat Treasury spokesman Vince Cable said: “At a time when official interest rates are close to zero and inflation is very low or negative it is unbelievable that people are being charged thousands or hundreds of per cent in interest.
“Much of this can be attributed to the withdrawal of credit from struggling households who can no longer use banks and are being driven into these extreme and extortionate forms of credit.
“These findings by the Daily Express underline the need for the Government to match its rhetoric with firm action to regulate these extortionate credit markets.”
Payday loans typically charge interest at an Annual Percentage Rate of between 1,000 and 2,000 per cent. Borrowers usually pay £25 interest for every £100 cash advance which the lender redeems after 30 days via a post-dated cheque for the amount borrowed plus fees and interest.
Internet lender QuickQuid.co.uk is advertising its services this month on national and local TV channels including SkySportsNews, Dave, Channel 5 and MTV. It offers a typical APR of a staggering 2,356 per cent while another major internet lender, PayDayUK, says its typical APR is 1,737 per cent. |
