Fancy A Free Loan? November 30th, 2011
There has been a great deal of growing concern in recent months regarding the costs and interest charged by some lenders on their personal loan products, particularly when it comes to payday loan providers, who are renowned for charging extremely high rates for their short term unsecured loan products.
However, one pay day loan company has recently announced that they are introducing interest free payday loans for a limited period for new and existing customers.
Instant LoansDirect.com have launched a pay day loan product which allows anyone who earns more than £750 per month to takeout an interest free loan of up to £300 for a period of not more than eight days. The product was launched on the 23rd of November and will run for a period of five months.
For those who may be thinking that this loan offer is too good to be true, you could be right! If the loan is not repaid in full within the eight day period, the company will start charging interest on the loan at a rate of 50p per day for every £100 outstanding on the loan.
This works out at an Annualised Percentage Rate of 448.3 per cent. If someone a loan of £300 and had not repaid it a month later, they would have been charged £33 and their loan debt would be increasing by £1.50 every day.
Una Farrell of the Consumer Credit Counselling Service said the scheme could prove disastrous for borrowers who were looking for a cheap loan. She said “It’s just a way to snare people into paying sky high loan rates.”
“I am very concerned that many people are going to get a nasty shock and find themselves lumbered with huge loan debts after taking out what they though was cheap credit.”