Is Your Loan Company Ripping You Off

Is Your Loan Company Ripping You Off

Is Your Loan Company Ripping you​ Off?
The companies that loan people money then add on​ sky high interest rates might claim to​ be doing people a​ favour by offering them the​ chance to​ have instant cash.
Instead,​ they are crippling the​ poor with debt .​
So says the​ Competition Commission which will quickly and clearly point out that what these outfits are doing is​ plain wrong.
What these companies have become,​ the​ commission is​ likely to​ tell you,​ is​ sharks - predators which prey on​ the​ most vulnerable in​ society because they earn the​ least and have no other way of​ gaining credit.
It is​ a​ sad fact that time and time again these outfits are reportedly charging up to​ 1000% interests per year for loans .​
That’s what the​ Competition Commission is​ telling us,​ despite how unbelievable it​ might sound .​
Let us for a​ minute put this into context .​
The more reputable firms charge 177% and that figure in​ itself is​ unbelievably high.
The worst part is​ there are supposedly 2m Britons buying into these sorts of​ arrangements .​
This is​ for the​ sole reason that they have little money and the​ outfits who lend cash on​ your average high street would never dream of​ letting them through the​ front door.
But finally the​ commission is​ saying enough is​ enough and taking a​ stand .​
What it​ is​ doing is​ making it​ clear and publicly known that there is​ no way that interest rates of​ 177% let alone 1000% can be justified.
It is​ looking to​ force these rogue outfits to​ spell out how much the​ loan will cost one of​ its customers .​
The hope of​ doing this is​ that customer might just do a​ double take when they realise if​ they borrow £100 the​ pay back amount will be £200.
Next on​ the​ to​ do list when it​ comes to​ tackling rogue money lenders is​ threatening them with a​ maximum legal interest limit if​ they do not back off with the​ unfair tactics .​
What this means is​ that if​ they then go and rake up the​ interest rates to​ extremes,​ they will be committing a​ criminal offence.
There are about five main players in​ the​ UK who work the​ home credit industry – one of​ them has half of​ the​ market share – and there’s another 500 which have a​ smaller amount of​ the​ business.
Their customers? Usually single parents,​ who live in​ areas of​ high deprivation .​
Debt collectors turn up at​ their front door for the​ payments – usually once a​ week or​ fortnight.
You might be thinking to​ yourself that those who have little money are a​ high risk and that the​ debt collectors are within their rights to​ charge the​ high interest rates.
But rates as​ high as​ 1000%? Or even 177%? One could argue that nothing justifies rates that high.
One of​ the​ money lenders in​ the​ market,​ Provident Financial,​ says they offer credit cards with interest rates of​ 70% .​
But right from the​ start the​ customer knows exactly what they are getting into.
With the​ agreement comes the​ statement customers are not being overcharged for their home credit loans,​ nor is​ the​ home credit sector making excessive profits.
But take this back to​ the​ Competition Commission and ask them whether they agree with this statement and they’ll tell you​ they don’t agree.
What the​ Commission wants,​ and plans to​ get,​ is​ for rules to​ be in​ place to​ bring down the​ interest of​ these loans and force these ‘loan sharks’ to​ spell it​ out in​ full what is​ the​ cost – the​ real cost – of​ the​ loan .​
Right at​ the​ end when it’s all paid off so at​ least the​ customer knows what they are entering into.
New rules released by the​ commission are supposed to​ be due out in​ summer.
And when the​ new rules are out,​ the​ Competition Commission hopes that people will wake up to​ how much they are forking out to​ pay for this cash up front and they’ll start to​ shun these types of​ loan companies like the​ plague .​
And the​ only ones left standing are the​ ones prepared to​ play fair.

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