Rates cap on legal loan sharking?
Rates cap on legal loan sharking?
- Tuesday, 3 August 2010The government is considering imposing a cap on the interest rates charged on unregulated loans in order to help those with
debt problems.
A new internet campaign has been launched by Compass, a centre-left pressure group consisting of academics and
debt advice charities, to encourage ministers to impose a cap.
The cap will target companies who offer money to people on the doorstep or 'payday loans' as they can currently charge as much interest as they like.
Gavin Hayes of Compass said: "Door-to-door lenders are charging £83 for every £100 borrowed while some online payday lenders charge 3,000 per cent APR."
It is thought that around three million consumers fall victim to these legal loan sharks, which could lead them into
debt problems.
The government has already committed itself to curbing the rates on store and credit cards but firms such as Citizens UK hope that it will go further to protect the UK's poorest borrowers.
Last month, the Citizen's Advice Bureau advised consumers to avoid paying an upfront fee for a loan as these tend to be scams and people can lose hundreds of pounds.

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