Money Lenders

Yes, they will have a Consumer Credit Agreement Licence and must be a registered company, their websites clearly state the APR so why do people still use them?

A quick Google search pulled up interest rates in excess of 578%! No, we haven’t left out a decimal point, that really is five hundred and seventy eight percent. Surely no one would pay that? Sadly people do, as these companies aggressively target people in receipt of benefits or who are on low income, people who are struggling to make ends meet. Once they have them hooked the rest becomes irrelevant.

Here are a few examples of the actual quoted costs
£200.00 with 6 monthly payments of £46.67 pm = £280.02 total repaid which is a whopping 233.4%
£150.00 with 6 monthly payments of £36.25 pm = £217.50 total repaid which has an APR of 280.4%.

Another service readily available is cheque cashing or pay day loans these are on offer with rates of *APR 1284%. How they work is simple; you write 5 cheques for £100.00 and they will pay £425.00 in to your bank account the next day. The cheques will be cashed on your payday next five pay days.

Roll over the payment option
£100.00 £20.00
£200.00 £40.00
£300.00 £60.00
£400.00 £80.00
APR 1284%

Based on Cheques Held For 31 Days
example:

• Send in 5 cheque's each of £100.
• Receive £425 paid directly into account day 1

• Month 1: 1st Cheque Cashed £400 Rolled-Over
• Month 2: 2nd Cheque Cashed £300 Rolled-Over
• Month 3: 3rd Cheque Cashed £200 Rolled-Over
• Month 4: 4th Cheque Cashed £100 Rolled-Over
• Month 5: 5th Cheque Cashed, Loan Closed.

*Note Annual Percentage Rates (abbreviated to APR) are worked out as a % of £1000.00 over one year as the loan is being repaid through out its term the APR will be higher.

• £1000 at 20% paid off in full at the end of the year = £1200.00
• £1000.00 paid back at £100.00 per month equates to approx 40% although £1200.00 is repaid