Payday advance lenders seek to avoid controversy

Payday advance lenders have been taking steps to avoid the controversy that surrounds the industry, with some instant cash loans providers going so far as to distance themselves in order to be given a fair shake.

Providers of instant short term loans have been under fire for the sky-high APR interest rates on their loans, which can sometimes go as high as 4,000 per cent in some instances.  However, industry experts say that the APR is an inaccurate method for determining the real cost of repayment, as the loans are specifically designed to be repaid in a short amount of time, unlike the lion’s share of traditional lending with year-long terms.

Some companies have taken steps to differentiate themselves from the major players in the payday lending industry.  One firm, with 15 London locations, instead markets itself as a firm specialising in retail financial services for communities that are under-banked and un-banked, yet the services they offer are quite similar to the payday lending industry in general.

The provider offers up to 60 days’ worth of short term loans at a 2,866 per cent APR, while it also offers loans of up to six months at a 405.3 per cent APR, along with something it calls an ’emergency’ loan, with a variable rate from anywhere between 86 per cent to nearly 340 per cent, and the provider’s bonus loans and emergency loans reward borrowers through a cashback option if borrowers make regular and timely payments.  However, much of the company’s marketing is quite similar to the payday lending industry, as it espouses adverts claiming its services can get its customers’ Christmas wishes sorted.

Providers of instant short term loans have been reporting massive demand in the run up to the festive season, prompting some experts to declare this new provider as little more than a ‘payday lender with a fig leaf.’

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