Astronomical payday loan rates may be capped to help cash-strapped borrowers falling into desperate debt
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Astronomical payday loan rates may be capped to help cash-strapped borrowers falling into desperate debt
By MONEY MAIL REPORTER
Updated: 17:37 GMT, 5 December 2012
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Money down the drain: The annual rates given by controversial firms that offer short-term, instant loans can be as high as 16,000 per cent
Astronomical interest rates on payday loans may be capped to prevent cash-strapped borrowers falling into desperate levels of debt.
Currently, the annual rates given by controversial firms that offer short-term, Fast Instant Loan App loans can be as high as 16,000 per cent. However, those loans may now be banned.
The Government will add a clause into a Financial Services Bill to allow the regulator to limit interest rates.
The level of the cap will be decided by the new Financial Conduct Authority and apply to all payday lenders.
A damning report by the Office of Fair Trading (OFT) recently revealed how some payday lenders dip into customers' bank accounts without asking if they failed to make their repayments.
The OFT is currently investigating 20 payday lenders which it believes are breaking rules.
There has been an 800 per cent increase in complaints about such companies over the past two years, according to the consumer watchdog.
Prominent supporters of the cap include the incoming Archbishop of Canterbury Justin Welby and Labour MP for Walthamstow Stella Creasy.
A spokesman from debt charity StepChange says: ‘We welcome the move and hope it will help address some of most worrying trends we have seen, such as the rise in multiple loans and increasing amounts owed by people seeking our help. If you have any queries about where by and how to use Quick Loan Application, you can make contact with us at the site. '
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Christmas credit shock: Why buying presents on short term loans could bar you from a mortgage
Payday lenders to see their sky-high interest rates capped after Lords back change in law
Debt counsellors have been approached by 16,500 people with problems linked to payday Best Online Loan App debt — more than 2,000 of them struggling with five of these loans or more.
With Christmas still to come, that is already near the 17,500 clients it spoke to last year, and well past the 6,500 figure for 2009.
The payday loan firms have long argued that quoting standard interest rates, known as an APR, are irrelevant because they average out the cost of a loan over a year.
This, they say, makes their rates seem more expensive than they really are.
By MONEY MAIL REPORTER
Updated: 17:37 GMT, 5 December 2012
8
View
comments
Money down the drain: The annual rates given by controversial firms that offer short-term, instant loans can be as high as 16,000 per cent
Astronomical interest rates on payday loans may be capped to prevent cash-strapped borrowers falling into desperate levels of debt.
Currently, the annual rates given by controversial firms that offer short-term, Fast Instant Loan App loans can be as high as 16,000 per cent. However, those loans may now be banned.
The Government will add a clause into a Financial Services Bill to allow the regulator to limit interest rates.
The level of the cap will be decided by the new Financial Conduct Authority and apply to all payday lenders.
A damning report by the Office of Fair Trading (OFT) recently revealed how some payday lenders dip into customers' bank accounts without asking if they failed to make their repayments.
The OFT is currently investigating 20 payday lenders which it believes are breaking rules.
There has been an 800 per cent increase in complaints about such companies over the past two years, according to the consumer watchdog.
Prominent supporters of the cap include the incoming Archbishop of Canterbury Justin Welby and Labour MP for Walthamstow Stella Creasy.
A spokesman from debt charity StepChange says: ‘We welcome the move and hope it will help address some of most worrying trends we have seen, such as the rise in multiple loans and increasing amounts owed by people seeking our help. If you have any queries about where by and how to use Quick Loan Application, you can make contact with us at the site. '
More...
Christmas credit shock: Why buying presents on short term loans could bar you from a mortgage
Payday lenders to see their sky-high interest rates capped after Lords back change in law
Debt counsellors have been approached by 16,500 people with problems linked to payday Best Online Loan App debt — more than 2,000 of them struggling with five of these loans or more.
With Christmas still to come, that is already near the 17,500 clients it spoke to last year, and well past the 6,500 figure for 2009.
The payday loan firms have long argued that quoting standard interest rates, known as an APR, are irrelevant because they average out the cost of a loan over a year.
This, they say, makes their rates seem more expensive than they really are.
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