An unsettling trend has been sweeping hard up Brits, offering people who have traditionally taken out short term loans in the past, low-interest rate loans providing that they pay a fee up front for the service.
Seen as easy targets, customers of high-interest, short term loans are jumping at the chance to ease their burden when they get the phone call dangling the carrot of easy, low-interest loans. However, as many are finding to their detriment, the ‘arrangement’ fees are disappearing into a bottomless pit and the ‘loan’ never materialises.
Having struck in England and Europe, it would now appear that it is The Highlands of Scotland that’s the latest region to be targeted by the fraudsters, following a number of complaints to the Trading Standards department of the Highland Council with disgruntled customers informing the body about the scam loan calls, sadly after the event.
One of the telltale signs that the calls are not from a genuine financial organisation is that they offer a no credit check loan, with no reference in the telephone call to the potential borrower’s previous credit history. With the current climate and traditional lenders still adhering to very strict lending guidelines, there is no way that a genuine financial organisation could offer such a deal.
That’s not to say that some brokers have not tried. For arrangement fees between £70-£100, that are not guaranteed but are not refundable, so they claim, they are making off with desperate individuals’ money leaving them with the impression that there is absolutely no chance of the consumer getting their cash back if the loan never materialises. The state of desperation is such that people are still paying for this service, grasping at the faintest of hopes of a financial lifeline
Advice from the manager at the Trading Standards office in Scotland, Gordon Robb, is to check out the details of any company who contacts them via a phone call before they carry out any transaction. By law, any firm entering into a financial transaction to lend money has to have been issued a license to do so by the Office of Fair Trading. All licenses are on public display at the OFT website – if the name of the company offering to arrange a loan does not appear on that list, then simply do not do business with them; better still, report the activity to the local Trading Standards office.
Additionally, by law, consumers are protected against losing money for loan arrangement fees. If, after six months, no loan materialises following funds being released to a licensed broker for that purpose, the consumer is entitled to 100% of the cash back that they have surrendered in the vain hope that they will be given access to the promised loan.
One other point that is extremely valid, given Robb’s additional statement that the department has had cause in the past to reclaim ‘hundreds of pounds’ for people who were ignorant of the fact that they were entitled to a refund. A no credit check loan may, on the surface, look to be expensive when the customer sees 4,000% APR/AER. But that is what you would pay over a year.
In many instances, short term loans can be more cost effective than slipping into an unauthorised overdraft. If you are prepared to concede £100 in arrangement fees alone, you may be better off investigating what a instant cash loan can do for you.
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