10,000% interest on loans - Tories

RESEARCH by the Conservatives has discovered some borrowers are paying “obscene” interest of up to 10,000% on internet and doorstep loans.Tory housing spokesman Grant Shapps revealed that poorer, vulnerable families were being targeted by be lenders as the Bank of England base rate falls to a record low of just 1.

Graham Dines

RESEARCH by the Conservatives has discovered some borrowers are paying “obscene” interest of up to 10,000% on internet and doorstep loans.

Tory housing spokesman Grant Shapps revealed that poorer, vulnerable families were being targeted by be lenders as the Bank of England base rate falls to a record low of just 1.5%.

Mr Shapps promised that a Conservative Government would take action to create more competition in the home credit market, which is dominated by just six companies.

Forcing companies to conform to the same data-sharing standards applied in the mainstream banking Tory plans for a free National Finance Advice Scheme would help consumers choose cheaper borrowing options - such as Credit Unions - following recent research suggesting that as many as 79% did not understand vital terms like APR (annual percentage rate).

Home credit companies offer `pay day' loans to tide people over periods of financial pressure. Loans rarely exceed �1,000 and are usually paid back in instalments within three months.

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Companies are often ready to make decisions within minutes and extend loans to people with less-than-perfect credit histories. But borrowers taking out a loan of �200 for one month often find themselves paying back �250 or �300 - the equivalent of an APR of well over 1,000%.

Mr Shapps's report claimed one company, QuickQuid, whose website states that “depending on the loan term, typical APRs will range from 1,351.7% to 9,889.3%.”