MORE than 600,000 hard-up families will take out extortionate payday loans to cover the cost of Christmas, a Sun on Sunday investigation can reveal, The Sun reports.
Some are being tempted into pocketing fast cash by festive-themed “introducer sites”, which coax them into the hands of lenders. Borrowers can then be hit with huge interest rates — sometimes DOUBLE the loan amount — leaving them with terrible credit ratings, CCJs and crippling debt if they can’t pay.
The sites either host adverts for regulated loans companies placed by search engines, or pass details on to other genuine lenders with high interest rates. One, Christmas LoansUK, hosts ads for lenders such as Cashflex.
ChristmasLoansUK owner Nicholas Massey, of Smethwick, West Mids, admitted to “misleading” people. He said: “I’m not an official lender. I’m the middle man taking advantage of Google’s advertising programme.”
Britain seemed rid of Wonga-style payday lending after finance chiefs capped interest on loans of 30 days or fewer at £24 per £100 borrowed.
While this initially saw the number of borrowers fall from 1.4million to fewer than 500,000, the Money Advice Service expects a spike over Christmas.
Another site is MyQuick Loan, run by McCrory Finances Limited. It offers a £400 loan for 90 days — outside the FCA’s 30-day cap — with interest of £161.92.
It warns rates could double if the customer is passed to another lender. Owner John McCrory, of Macclesfield, Cheshire, said: “People know what they’re getting into — it’s clear.”
Mum-of-four Sarah Carty, 40, turned to a payday lender in December 2015. She lives on benefits of £500 a month in Newcastle, and ended up on 100 per cent interest on a £600 loan from Lending Stream.
She said: “After a year I couldn’t afford it. I can’t get credit at all now. I’ve learnt my lesson.” Lending Stream was not available to comment.
The Consumer Finance Association, which represents some payday lenders, said: “Less than one per cent of the population uses payday loans”.