According to a spokesperson from the Consumer Credit Counselling Service, fee-free no credit check loans are simply traps set by payday advance firms to trick households into paying through the nose.
Extortionate interest rates lurk in the shadows of zero interest rate short term loans, waiting to ambush low and middle income families in the UK, says the debt charity’s spokesperson, Una Farrell. The chance to take out short term loans with a 0 per cent interest rate associated with it is a newcomer to the industry, but providers have said that they hope to aid UK households during a time when their financial woes have been mounting due to the economy.
However, Ms Farrell was extremely suspicious of the move. The spokesperson compared the effect of short term loans on financial health as the same as a dozen hungry dinner guests have on a plump, juicy Christmas turkey.
The new deal does sound almost too good to be true, as the terms 0 per cent interest on as much as £300 for a term as long as eight days, provided the borrower can prove they earn £750 or more every month. With the festive season nearly upon us, many Brits will find their finances stretched to the limit, and an extra £300 interest free for a period of eight days could prove to be quite the tempting offer.
There are fees, of course, if a borrower fails to repay the loan after the end of the eight day period. Borrowers should be prepared to pay 50p on every £100 borrowed every day until they repay their loan in full, which is actually much less interest than traditional short term loans.