SCROOGE payday lenders are targeting skint Brits with post-Covid Christmas loans at “eye-watering” interest rates of up to 1,333 per cent.
The cynical move has been condemned by critics as it comes just a day after repayments restarted on payday loans frozen during Covid-19.
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Borrowers were handed payment holidays during the coronavirus pandemic. But now a Sun investigation has revealed the loan-shark style lenders are ramping on their Christmas loan offerings now that Government relief schemes are coming to an end.
Broker, My-Quick Loan, is offering “Christmas loans” of between £100 and £5,000, they promise will be, “in your account in ten minutes”. But small print on the firm’s website shows interest rates on the loans offered range from between 49 per cent and 1,333 per cent APR with customers warned, “Christmas loans shouldn’t be taken out lightly, as they could end up costing you more than some alternative options”.
Fellow broker, Payday UK is also offering, “instant decisions on Christmas loans” of between £50 and £5,000 at rates of between 9.3 per cent and 1,294 per cent 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 firm’s loan offering starts at a whopping 1,013.3 per cent APR – something the firm suggests may not bring, “world peace, but will help get your finances in order”.
This means if you borrow £550 over 18 months at a flat rate of 207.6 per cent per annum you will make 18 monthly payments of £125.71, or £2262.78 in total – that’s over four times the amount originally borrowed.
Loans At Home is offering loans at a rate of 433 per cent APR meaning a £300 loan taken out over 33 weeks will end up costing a borrower a total of £495 to repay. Another firm, 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 a £700 loan taken out over 12 months will incur interest of £635.24 at a rate of 277.5 per cent APR meaning the total 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 subsided the wages of nearly ten million workers – and other government support schemes will hit record numbers in the pocket.
Welsh Labour MP for Swansea East, Carolyn Harris, said: “Many communities are really struggling right now and payday lenders are shamelessly trying to cash in on those who are already in financial trouble. We must not stand by and let this happen now the repayment freeze has ended.
“Promoting fast loans with truly eye-watering APR rates just before Christmas is exploitative and is only going to deepen the gross inequality Covid-19 has exposed across the country. The government needs to realise that we are still in an emergency situation – 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 at Debt Camel said: “Lenders have to help you if your income has dropped or you have lost your job.
“You can offer credit cards, loans and catalogues just £1 a month and ask them to freeze interest, giving you time to get back on your feet. A good debt adviser can help you do this.”
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Payday UK told The Sun: “Thank you for highlighting this. The ad (which includes a dynamically created landing page, ie we don’t target this specifically in our website) was created and placed on the ‘Christmas Loans’ keyword in Google Ads by our digital agency.
“This is not in line with our internal advertising policies and has been removed with further measures taken place to ensure it doesn’t happen again.”
The other lenders did not answer requests for comment.
Chancellor Rishi Sunak announces extensions to Pay as you Grow and other coronavirus loans as well as business VAT and tax payments
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This post first appeared on thesun.co.uk
