Pay and don’t display – the APR cover up amongst payday providers
Press Release - 08 January 2013
While payday lenders should be cleaning their act up in 2013 as the Government places them under even greater scrutiny, independent research from Amigo Loans, the guarantor loan provider, reveals there are some providers that are continuing to dupe their customers. Research has revealed a number of websites providing payday loans are continuing to incorrectly display APRs on their websites, some by 1000% and some higher still, with one providers actual APR a staggering 35920% higher than stated on their website.
The research exposes six out of 33 websites offering payday loans in the UK market, who charge up to 1000% more than their advertised APR rates. By examining payday providers APRs, the representative example shown on their websites, and using this to calculate the annual rate of interest, Amigo Loans reveals the following websites are incorrectly displaying annual APRs:
| Provider | Stated APR | Actual APR | Difference |
|---|---|---|---|
| Payday UK | 2090% | 2942% | +852% |
| Payday Pig | 3903% | 4114% | +211% |
| 100Day | 1734% | 2222% | +488% |
| Community Payday | 2600% | 38520% | +35920% |
| PaydayMom | 1734% | 2222% | +488% |
| Purple Payday | 1909% | 2942% | +1033% |
James Benamor, founder and CEO of Amigo Loans comments:
Despite ongoing criticism of their practices, there are still many payday providers who aren’t playing by the rules, so more often than not borrowers are kept in the dark. While the Government is taking steps to clampdown on these lenders, these changes won’t come into force until 2014 and more needs to be done ahead of then to ensure borrowers get a fair deal. Google recently announced changes to the way payday providers must display APR and collection methods on their websites and this is the direction the industry needs to be moving in.
Borrowing from a payday lender is rarely the answer. There are other options out there right now, yet many borrowers are simply unaware these options exist. The truth is, with the likes of Wonga spending millions on glossy marketing and advertising, and the lack of any means of comparison within the lending market, borrowers are making seriously un-informed decisions, which could leave them struggling for years to come. Borrowers can find cheaper short term loans which are offering APRs in double not quadruple digits through alternative lenders such as Amigo Loans or credit unions. Amigo Loans calculate interest daily, charge no fees for early or late repayment and can work out thousands of pounds cheaper than regularly using payday lenders.
Amigo Loans offers a different way of borrowing, giving people the chance to build up their own credit score rather than destroy it by using payday loans. It works on the basis of trust, not credit scoring, to offer loans using friends and family as guarantors – friends who want to help people re-build their financial security.
