- 03
- Sep
Reports of high interest rates from doorstep lenders in the York area have caused a stir in the financial industry. Many analysts are concerned that the company is profiting from the misery of others.
Many consumers who apply for doorstep loans do not realize they have legal rights, and this ignorance leaves them vulnerable.
Kate Hignett, Legal Aid caseworker for the Citizens Advice Bureau (CAB) said: “There are no statutory caps on the interest that a credit company can charge its customers.
“Unfortunately, it is typically people on low incomes or with a poor credit rating who tend to borrow from doorstep lenders because they cannot obtain credit from high street lenders.
“We have always advised clients when they are planning to borrow money, always to ask what the total amount will be they will have to pay back.
“We work very closely with Credit Unions and advise clients to use them where they can as they provide responsible lending at a realistic cost.”
For a loan of £300 from a lender in York who is charging 177%, consumers may eventually pay £195, ten times what the city’s credit union charges.
Lender Provident advertises on their website that a loan of £300 repaid over 55 weeks at £9 a week has a total payout of £495.
York Credit Union advertises £300, paid back at £9 a week, would clear the loan in 36 weeks with only £19.32 in interest.
While doorstep loans are available to many people in high risk credit categories, who would not qualify for a loan from a traditional lending company, consumers are alerted to the fact that they could borrow the same amount from a credit card for less than the interest charged by the doorstep lenders.
