SCROOGE payday lenders are targeting skint Brits with post-Covid Christmas loans at ‘mouth-watering’ interest rates of up to 1,333%.
The cynical move has been condemned by critics as it comes just a day after payday loan repayments were restarted frozen during Covid-19.
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Borrowers have been granted payment holidays during the coronavirus pandemic. But now a Sun investigation has found loan shark-style lenders are stepping up their Christmas loan offers now that government relief programs are coming to an end.
Broker My-Quick Loan offers “Christmas loans” between £100 and £5,000, they promise they will be “in your account in ten minutes”. But fine print on the company’s website shows interest rates on loans offered vary between 49% and 1,333% APR with customers warned: ‘Christmas loans are not to be taken lightly , as they might end up costing you more than some alternative choices.”
Fellow broker, Payday UK also offers “Instant Christmas Loan Decisions” between £50 and £5,000 at rates between 9.3% and 1,294% APR in just ten minutes.
Lender Loans 2 Go evokes the spirit of John Lennon’s festive anthem, “Happy Christmas: War Is Over” – with their Christmas offering – suggesting the classic song, “seems more relevant every year”. But the company’s loan offer starts at a whopping 1,013.3% APR – which the company suggests may not bring, “world peace, but will help get your finances in order.” “.
This means that if you borrow £550 over 18 months at a flat rate of 207.6% per annum, you will make 18 monthly installments of £125.71, or £2,262.78 in total, more than four times the amount. originally borrowed.
Loans At Home offers loans at a rate of 433% APR, which means that a £300 loan taken out over 33 weeks will end up costing the borrower a total of £495 to repay. Another company, Cash Crazy, advertises Christmas loans of up to £5,000 for ‘people on benefits’.
“Shamelessly trying to cash in”
But a blurb on the broker’s website shows that a loan of £700 taken out over 12 months will attract interest of £635.24 at a rate of 277.5% APR, meaning the full amount repayable on the loan would be £1,335.24.
Debt campaigners have warned the end of the furlough scheme at the end of October – which subsidized the wages of nearly ten million workers – and other government support programs will hit record numbers in the pocket.
Welsh Labor MP for Swansea East, Carolyn Harris, said: “Many communities are really struggling right now and payday lenders are shamelessly trying to take advantage of those who are already in financial difficulty. We must not sit idly by and let this happen now that the refund freeze is over.
“Promoting fast loans with really eye-watering APR rates just before Christmas is exploitative and will only worsen the gross inequality that Covid-19 has exposed across the country. The government needs to realize that we are still in an emergency – and this pandemic is far from over. Ministers must not give payday lenders a free pass to push individuals and families into poverty just as the second wave of this virus hits.
Sara Williams from Debt Camel said: “Lenders need to help you if your income has dropped or you have lost your job.
“You can offer credit cards, loans and catalogs for just £1 a month and ask them to freeze interest, giving you time to get back on your feet. A good debt counselor can help you do this.
Payday UK told The Sun: “Thank you for pointing this out. The ad (which includes a dynamically created landing page i.e. we don’t specifically target it on our website) was created and placed on the keyword “Christmas loans” in Google Ads by our digital agency.
“This does not comply with our internal advertising policies and has been removed along with other measures taken to ensure it does not happen again.”
Other lenders did not respond to requests for comment.
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