Midlesbrough Council has recently warned residents from using short term loans on account of the large interest rates these quick loans carry, industry insiders recently reported.
Officials from the local authority are preparing to write to the providers of these instant cash loans and requesting to learn what sort of checks are made on prospective borrowers in regards to how credit worthy they are prior to handing over the loan amount. Middlesbrough Trading Standards has also taken steps to urge people to think long and hard before borrowing cash from one of these providers, which follows on new adverts from lenders that seek to portray the loans in a positive light as valuable solutions to those in need of quick cash right away.
However’ the borough’s trading standards officials say that blisteringly high interest rates can result in borrowers landing themselves in hot water, as debts could easily spiral to the point where meeting repayments would be nearly impossible. Several of its clients have even been found to have used five quite similar lenders in quick succession, with officials stating that the typical APR on one of these short term loans can be as large as 4,000 per cent.
However, these loan providers refute the claims, saying that APR is a distortion of the charges due on repayment, as short term loans are designed from the bottom-up to be solutions in the short term. Lenders insist that a typical monthly loan for £100 has a solid and unequivocal fee associated with it, such as £30, but Trading Standards officials remarked that trouble is on the way if the borrower cannot repay the loan, as letting it roll over for a month will see even more charges assessed.