OFT give thumbs-up to high interest 'payday' lenders
If you’ve ever been disgusted by one of those adverts for loan companies that offer typical interest rates of 2356% APR then you’ll be interested to learn that the Office Of Fair Trading don’t share your revulsion about it all.
The loans are normally short-term which explains the slightly-higher-than-normal interest rates, as lenders go for the quick buck from their borrowers. But the OFT say that the sort of people who go for these ‘payday’ loans aren’t serviced by regular banks and that there are relatively few complaints from within the sector.
It’s a booming business, with £7.5 billion believed to have been loaned short-term in 2008 but with a high incidence of missed or late repayments. But the OFT offered the payday lenders the a compliment, saying that they “show forbearance with repayment difficulties and do not penalise borrowers when payments are late or missed". Aw, bless.
Have you ever found yourself forced to take out a 2356% APR loan and did the transaction leave you with a smile on your face or your fingers crushed in a vice? We’re joking of course… or are we?