UK pressure groups are angry that the Government failed to take action against legal loan sharks last week.
The Government has been reviewing consumer credit and last week it announced a voluntary deal whereby High Street stores would no longer offer discounts to entice customers to take out a store card. However, the government did not go as far as capping the interest rate charged on these cards, which can be as much as 30%, or taking action against instant cash loan companies that charge ridiculous rates for small loans.
Data from the Debt Advice Foundation suggests that 41% of people caught up in the debt trap have taken out salary advance loans, and many of them claim they were not given fully informed about the full cost of the loan.
MPs and pressure groups want the instant cash loan industry to be regulated and doubts have already been raised as to whether some lenders operate completely within the law.
One major concern is whether customers of no credit check short term loans companies are allowed the legal cooling-off period of 14 days to cancel the loan.
An increasing number of people are expected to turn to short term loans to finance their festive celebrations. If you are one of them, make sure you can afford to repay the loan within the requisite time frame, or else you could get caught in the debt trap.