Payday advance lenders say that, even though critics may decry the services they provide for low income earners struggling to keep food on the table and the utilities paid, eye watering interest rates on short term loans are misleading.
The High Street may not be looking forward to the festive season, as retailers are expecting lacklustre levels of business with so many Brits feeling the financial squeeze, yet the instant cash loan industry is one that is not in any danger of slipping into the red this Christmas. One provider of online loans, Ferratum, recently remarked that in excess of 2 million Brits have already availed themselves of their services, according to the UK marketing and sales manager for the company, Ian Porter.
Mr Porter said that Ferratum has already seen a substantial increase in demand for its services. This is especially telling because there are still several weeks until Christmas Day, and since the majority of Brits have already gotten paid this month, the need for a bit of extra cash to get them through the festive season will only grow even larger over time.
Short term payday lending are primarily designed for just this purpose – tiding over borrowers until their next pay date, with providers offering the funds with a minimum of hassle and time. Designed to be paid back within around a month on average, these loans come with APR interest rates that can seem enormously high, from anywhere between 2,500 per cent to 5,000 per cent, but using an APR to advertise lending rates – something all lenders in the UK are required to be law – are misleading due to the length of these loans, which are much shorter than a traditional loan from a High Street provider.