Monday, July 28, 2008

Debt advice groups want an urgent probe of all payday loans companies that charge outrageous interest rates.

Some payday lenders, reports said, charge up to 2,000 per cent interest rates annually and the groups said the Office of Fair Trading needs to regulate and make them behave responsibly.

Their mode of operation is often characterised by typically advancing desperate customers cash against a post-dated cheque, which could be repaid at the end of the month.

The market regulator reportedly said they would be investigated on the basis of responsible lending.

In spite of the allegations against the firms, which are legally registered, they insist that they are professional and responsible.

Some of them have tried to justify their action by saying they have been of benefit to people who need money but may pay high costs for unauthorised borrowing.

With the credit crunch hitting harder people could look for alternative forms of borrowing that are very expensive, warned National Debtline’s Beccy Boden.

Source: http://www.onlyfinance.com/Loans-News/