By Daniel Hunter
Amigo Loans is warning against a new wave of short-term, high-APR lenders appearing in the market. Often billed as an alternative to payday, these new lenders are offering 'supersized payday loans' which actually end up being more expensive, as customers borrow even greater amounts for longer periods.
According to the latest research from one of the UK’s leading alternative loan providers, these supersize payday loans top the list as the preferred alternative lending option for consumers, and a whopping 8 million Brits have already taken one out.
Yet its investigations reveal these supersize loans can be more costly and dangerous than consumer may think. Sometimes marketed as '12 month loans', borrowers taking out a £500 with these products can end up repaying £949 at the end of term - almost double the amount initially borrowed.
People also appear confused about what so-called ‘one year loans’ actually are. A third (29%) aren’t sure or don’t know of the difference between a ‘one year loan’ and a ‘payday loan’, and of the 8 million Brits who have already taken out what they believe to be a ‘one year loan’, 13% admit they actually don’t know or aren’t sure of the difference.
“The lending industry seems to go from one set of crooks to another, but actually these are big corporate organisations. Many of them are owned by the same companies behind payday loans with sky high APRs and hidden charges," James Benamor, founder and CEO of Amigo Loans commented.
"‘Pounds to Pocket’, for example, is owned by ‘CashEuroNetUK’ that also runs by ‘Quick Quid', while recently launched ‘Satsuma’ is owned by ‘Provident Financial’. They are essentially trying to rebrand as something different to work around the system and skirt the new regulations.
“It’s a real worry that such a large number of consumers have taken out a supersize payday loan, and even more so when you consider the number who have committed to one without actually understanding what they are and how expensive they can be. More needs to be done urgently to educate people on these loans and the cheaper and healthier alternatives.”
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