Do instant cash loan companies truly ‘not believe in Christmas?’

Payday loan companies have faced a new salvo fired by detractors, with claims that the industry is decidedly Grinch-like this festive season and that lenders ‘don’t believe in Christmas.’

Small loans provided by payday lenders have been criticised before, as many charge an annualised percentage rate of nearly 4,000 per cent in interest to its borrowers over the course of the loan.  However, these short term loans, which are only advertised with an APR because lenders are required to by law, are not nearly as expensive to repay as the APR leads consumers to believe, as the APR is an inaccurate way of representing the real cost of repayment on a loan with a term of just a month instead of a year.

Despite lenders constantly pointing out the fallacy of using an APR to evaluate an instant cash loan, detractors have been slamming the industry as being ‘extortionate,’ lobbying hard to make such ‘outrageously high’ interest rates a thing of the past.  The heat has been turned up in the run up to the festive season, with the number of Brits relying on instant cash loan companies to make ends meet and also do all their gift shopping in time for Christmas rising rapidly due to the stagnant economy and increasing unemployment.

The instant cash loan market has exploded recently, with volume undergoing a 300 per cent increase since 2007.  Brits now avail themselves of in excess of £1.7 billion in loans from the industry on an annual basis, according to some market estimates.

The Newcastle Citizens’ Advice Bureau recently reported that out of the 15,000 individuals that contact it every year, around one out of three have borrowed from a payday lender.

© 2023 All rights reserved. Reproduction in whole or in part without permission is prohibited. See our copyright rules.

What do you think?

Please note that email addresses are not visible on approved comments.