Ouch! In the controversy surrounding payday lenders, Easy Finance Club wins the prize for the highest APR rate of them all.
On the company’s website, they claim they have a typical representative APR of 3,300%. However, the true cost of taking a loan from this company is much, much higher at an APR of 68,300%.
A loan of £100 taken out over 14 days would result in a total repayment of £135.
Easy Finance Club is a trading name of a larger company, Web Loans Processing Ltd., which has several other brands under its umbrella, including Community Payday and Toothfairy Finance.
Toothfairy Finance was the subject of an Office of Fair Trading investigation in 2010, and was given a strict set of guidelines it must comply with, including not levying debt collection charges which are disproportionate to the amount a borrower owes.
Payday lenders have come under criticism for trying to fool the public into taking short-term, high-interest loans in times when they are vulnerable. For many, the lure of a short-term fix to financial problems only compounds an already desperate financial situation.
In a recent report by Which?, it found that 50% of borrowers cannot repay their loan and 70% regretted taking out the loan from a payday lender.
A common practice of payday lenders is to take repayments from the borrowers debit card through continuous payment authority, which means they can take a repayment from the card at any time of the month. Many lenders are not making borrowers aware of how repayments will be taken and how the borrower can cancel the arrangement.
Failure to repay a payday loan on time pushes the borrower even further into a financial trap, with many of the payday loan providers imposing exorbitant charges in defaulters.
The number of payday loan companies has exploded in the last twelve months, many being trading names of larger companies. With glossy adverts promising all kinds of solutions to people in desperate need, it is no wonder that so many are tempted in times of difficulty.
Although it is up to the person considering taking out a payday loan to check that it is right for them, we think that these payday loans companies are exploiting vulnerable people and should be shut down.
While looking into payday loans, we found this advice on moneysupermaket.com which we will leave you with:
WARNING: Is a payday loan right for you?
There are times in the month when you may need a little extra cash. If you don’t have any savings, and have no other forms of borrowing such as family, a credit card or overdraft, you could consider a payday loan. A payday loan is designed to tide you over until payday and should NEVER be considered for long-term borrowing. If you cannot afford to repay the amount in full once you get paid, or will leave yourself short at the end of the next month – these loans are not for you as they can be extremely expensive.