thebigman

ANTI-POVERTY campaigners hit out at greedy lenders last night after it emerged they were charging interest rates of up to 2.6MILLION per cent.

Early Payday Loan set the sky-high rate on a cash advance of just £320.

Government minister Angela Smith said she was "horrified" to learn of the extortionate charge when it was revealed in the House of Commons.

She told MPs: "We all share concerns about this because it is often those on the lowest incomes who end up paying the highest prices because of the high cost of borrowing."

Last night, Labour MP Jim Devine, who is campaigning for interests rates on loans to be capped, said it was further proof of how lenders can take advantage of people who are struggling for cash.

He added: "I'm absolutely appalled that this company are charging such exorbitant rates of interest and it reinforces the need for a limit to be imposed.

"With Christmas just around the corner, increasing numbers of hardworking families on low incomes will be tempted to take out short-term loans to buy presents for their kids. This shows how wary they should be before they sign up."

The Livingston MP, who plans to take up the matter with Business Secretary Peter Mandelson, said those on low incomes should instead join their local credit union, who can offer loans on much cheaper terms.

On their website, Early Payday Loan say arranging a loan with them "takes just a few minutes".

They add: "Once you have filled out our short application form, your payday loan could be in your account in a matter of hours.

"We pride our selves on providing our customers with fast cash loans into their account with minimal hassle when they need it most!"

A copy of the credit agreement in question has been seen by the Daily Record.

It says: "The APR in respect of this service is 2,639,538.9%."

Last night, the company denied the interest rate was actually as high as that and said the figures quoted in the loan agreement "could possibly be the result of a technical error".

According to the credit agreement, the interest rate on the £320 loan was 25 per cent as long as the borrower repaid a total of £400 within a month.

The higher interest charge would kick in if the loan was not repaid in full and on time.

But Peter Kelly, director of Glasgow-based Poverty Alliance, said it showed the dangers faced by Scots searching for easy credit.

He added: "This is obviously a very extreme example but it shows how careful borrowers need to be before they take out an emergency loan."

origional story here

Shocking that they can prey on the low paid like this.

thebigman

TheJackel

These people are fookin vultures praying on the weak and needy the sooner laws and litigation is brought in to protect the lender the better, the people they lend to in general are people on their last legs nowhere else to turn, last chance saloon, who dont know numbers and thats what they love, scum.

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Rodbouy

same with the provi fckn legal loan sharks. Dirty SCUM

Munkey

These companies are only taking advantage of a financial system that is legal in practice. If the BoE didn't artificially lower interest rates to 0.5% and allow banks to offer this as a savings rate whilst charging 5+% for borrowing we would have any ambiguity in our interest rate system.

Don't blame the companies that take advantage of this. You could blame the regulatory system for allowing this to happen but as no laws have been broken, finger pointing should be aimed squarely at the chancellor and the BoE chief for putting in place the infrastructure for such a system.

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nara

That argument is morally bankrupt. You can excuse something that is morally wrong, just because it's not illegal?

I seem to have heard that sort of reasoning before here on DW.

thebigman

your correct Munkey,it is legal. I had actually thought there was a maximum apr that a company could legaly charge. Just because it's legal though doesn't make it right, there are more and more of these companies sprining up in high streets across the country as the recession bites. The law does need reviewing as far as I can see they are no better loan sharks.

thebigman

nara

Correct. Right and wrong is not determined by the law. It's down to something much more old-fashoned. Human values.

So yes, I will blame the loan companies Munkey, for ignoring those values and cynically taking advantage of those least able to afford it.

die5el

I blame the people using them sort of companies if people stopped using them to borrow money then these companies (loan sharks) wouldn't exist .say if you borrowed £100 from these type of companies you know you are going to pay back about £170 ,i know people fall on hard times but none is forcing them to take out these type of loans with high interest

nara

We're not discussing banks or credit card companies.

TBC

i think this fits neatly into the legal term of "extortionate interest" tbvh - no way in hell this would be inforced through a court if defaulted imo.. It is about time an actual definition of extortionate was made available to these sharks, clearly these terms would only attract those incapable of paying or someone completely ignorant of financial apr'ism < hey made that up lmao..