Ulster Unionist MLA Sandra Overend has commented on the recent report on Trading Standards findings on how “easily Payday loans are being given with little or no back ground checks taking place.
In today’s tough economic times some Payday Loan companies are cashing in on the vulnerable in our society by offering these High Interest Loans, which are backed up by high-profile advertising promoting the loans as handy solutions to short-term cash flow problems. Typical APRs (the annual percentage rate of interest) quoted can be as high as 4000% - the companies claim APR distorts their charges as they are designed as a short-term solution and they make the charges clear - eg £30 for a £100 loan over 28 days.
Mrs Overend, the Mid Ulster Assembly member and Enterprise, Trade & Investment spokesperson said -
"Problems arise when the borrower is unable to repay the loan and it rolls over into the next month, incurring more charges, or in the case of the recent Money Advice clients, a second loan is taken out with another company to repay the first.
The reports findings that some lenders are flouting current legislation where they are required to assess the creditworthiness of all applicants before granting any loan, although Trading Standards Officers in Middlesbrough believe all companies may not be carrying out the necessary checks. Trading Standards have a key role to play in addressing this whole issue.
Finally, people in debt should realise that they are not alone. It is essential that customers know exactly what they are signing up for. It is also essential that people who find themselves are slipping into debt face up to the problem and address it by discussing it with experts such as Citizens Advice etc. Too many people unfortunately do not face up to the problem early enough and wait until small problems become large ones. I would urge them to see professional help at an early stage."