11 Dec. 2009

CONSUMERS have been urged to be cautious of taking out loans with interest rates of more than 2,000 per cent being advertised on North- East television.

Charities have branded the adverts for QuickQuid, running on Channel Five, as “particularly cynical”.

As many families in the region wonder how they will pay for Christmas, the company is offering loans of up to £1,500 with the annual interest rate varying from 819 per cent to 2,222 per cent.

This means a borrower taking out a loan of £100 could pay more than £275 in interest if the sum is paid back over a year. QuickQuid is one of several payday loans companies offering short-term loans in advance of wages.

The companies offer a same-day lending service – often to people with poor or limited credit history.

QuickQuid says it takes only five minutes to apply for one of its loans.

Francis Walker, from the Consumer Credit Counselling Service, said there was nothing illegal about the advertisements or loans.

However, she added: “I think it’s particularly cynical advertising during the day when people out of work are watching, and I would advise anyone to approach these kind of lenders with caution.”

A spokesman for Barnardo’s North-East said money lenders were cashing in while the recession threw families into deeper poverty.

He said: “Research by us has found that families living in poverty have to turn to expensive and unaffordable loan companies to survive.”

Barnardo’s said the region’s poorest families were bearing the brunt of the recession.

“They are in hopeless situations,”

he said. “Typically, they have no savings, nothing to fall back on, no relatives or friends to help and, in desperation, they take out loans with huge interest charges, the repayment of which plunges them into deeper poverty.”

A spokeswoman for the Advertising Standards Authority said it was not a breach of regulations for companies to advertise high-interest loans on television.

Source:

http://www.thenorthernecho.co.uk