Alan Vincent
"Have nothing to do with the 
 fruitless deeds of darkness, but 
 rather expose them." Eph 5:11


A Spiritual Discernment Ministry

Obscene Mortgage Rates

'Obscene' 10,000% Loan Rates

Borrowers are paying interest of up to 10,000% on internet-based and doorstep loans, according to a Conservative report.

The claim comes despite the Bank of England cutting its main interest rate to a record low of just 1.5%.

Tory housing spokesman Grant Shapps said it was "obscene" that some of the country's most vulnerable households were paying high interest at such a time.

He said a Conservative government would take action to create more competition in the home credit market.

The market is estimated to be worth £3bn a year but is dominated by just six companies.

Forcing companies to conform to the same data-sharing standards applied in the mainstream banking sector would allow consumers to switch more easily between lenders, said Mr Shapps.

Tory plans for a free National Finance Advice Scheme would also help consumers choose cheaper borrowing options - like Credit Unions.

The plans follows research suggesting that as many as 79% of consumers did not understand vital terms like APR (annual percentage rate).

Home credit companies typically offer "payday" loans to tide people over periods of financial pressure.

Loans rarely exceed £1,000 and are usually paid back in instalments within three months.

Companies are often ready to make decisions within minutes and extend loans to people with less-than-perfect credit histories.

But borrowers taking out a loan of £200 for one month often find themselves paying back £250 or £300 - the equivalent of an APR of well over 1,000%.

Mr Shapps's report cited one company, QuickQuid, whose website states that "depending on the loan term, typical APRs will range from 1351.7% to 9889.3%".

Source: Sky News & Yahoo News 9 January 2009.


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