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Doorstep Lenders Offer Loans at 400% APR.
We speak to people everyday who enter into finance agreements without understanding the level of interest they will be charged.
You may be surprised how many people do not know that APR stands for Annual Percentage Rate, nor are numerate enough to equate the figures to what they are actually being charged.
For example, if I were to lend you £10 today and ask for £11 back in one week, that does not sound too bad, but what is the APR?
10% interest over one week, which is 1/52 of a year.
So the APR is 10% * 52 = 512%.
Often, these are loans from so called door step lenders, who deliver cash to your home and collect weekly payments in person.
For example Greenwoods Personal Credit offers £200, paying back £320 over 32 weeks. That’s 399.7% APR. Their tag-line “For loans that put you in control” hardly describes the reality of the situation.
Provident Personal Credit is a trading style of the same company, their headline rate is currently 365% APR for £500 over 31 weeks.
Who Borrows Money at 400% APR?
People who are vulnerable. People who are desperate. People who can’t get credit by conventional means. People who need a 400% APR loan like they need a hole in the head.
Anyone borrowing from a doorstep lender usually has problems paying other essential bills. When someone is knocking on your door asking for payment each week, normally to coincide with when you get paid or collect benefit, who is going to get paid first? Correct - the doorstep lender.
Once you are some way to repaying the loan, the doorstep lender will offer to “top up the loan”. In other words, keeping you where they want you - in debt to them and paying an enormous APR.
Please Share Your Thoughts By Leaving A Comment.
What is the highest APR you have seen for loan?
Have you borrowed money without understanding the true cost?
One Response to “Doorstep Lenders Offer Loans at 400% APR.”
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September 25th, 2007 at 11:21 am
In a previous part of my working life, I worked as a manager and collector for a doorstep lending company. I am ashamed to say that I have written loan agreements where the APR has been in excess of 800%. All perfectly legal and above board I hasten to add.
These companies have a right to trade as much as anyone else, they can be quite useful for those people who may not be able to get credit from banks and only need a short term loan. It is where agreements are constantly being “topped up” that danger lurks. I have seen many instances where people have borrowed from one doorstep collector to pay the next one due.
Robbing Peter to pay Paul in other words, these sort of debts need specialist debt help as much as any other.
If you need further help or advice, or are looking to clear your debt without further borrowing then call me direct on 0161 905 8813.