Payday loan companies are often accused of irresponsible lending, but that is not true of all of them.
Last week, Gary Miller-Cheevers, the CEO of speedeloans.com, back the Labour MP Stella Creasey’s call for the government to cap the cost of borrowing. Ms Creasey wants to see a cap on the interest rates payday advance firms are allowed to charge on their loans before the Christmas rush.
Mr Miller-Cheevers said that instant cash loans are primarily there to cover short-term needs and emergencies. 31% of people in the UK do not accessible savings and if they suddenly receive an unexpected bill, an instant cash loan can help them out until they receive their next salary.
However, some lenders do not act responsibly and they charge exorbitant amounts to people who borrow small amounts of money. The theory behind a cap sounds reasonable and speedeloans.com endorses that, but should the government cap the cost of credit or the APR?
The expresses the annual interest and is therefore totally inappropriate for a loan lasting only days. The average term for a speedeloans.com cash advance is 19 days and works out as a 1% daily interest rate.
He went on to explain that the firm is in favour of expressing the cost of its short term loans in real money so that customers know exactly what they need to repay. He also pointed out that the APR charged by banks on unauthorised overdrafts can reach as much as 80,000%.
At the end of the day, there needs to be a system whereby unscrupulous lenders cannot rip off customers, he concluded.