Pay day loan warning

Local MEP Paul Nuttall today warned the desperately cash-strapped to be extremely wary of pay day loans.

A report by insolvency trade body R3 has just revealed that potentially five million British adults are tempted to take out a short-term loan over the next six months.

"They may be short term but they are high cost and can result in alarming interest rates of more than 1,500%," said Mr Nuttall, UKIP Euro MP.

"If people are considering taking such a loan I earnestly urge them to read the small print very carefully first and not make a hasty decision.

“These loans snare people into cycles of debt and however desperate they are now, their situation will only worsen with more debts they cannot pay.

"If you can’t pay back the loan on the due date the lender may then ‘roll over’ the loan for another month and you’ll have to pay another 30 days’ interest on the loan, plus the interest that’s already built up on it.

"It may be legal, but is morally corrupt and just legal loan sharking.

"Meanwhile the Government is waiting to see if payday lenders improve their behaviour through voluntary codes of conduct being implemented by the four trade associations.

"However I believe instead the Government should act as it is plain that self-regulation is not working. This is an urgent matter, the R3 survey shows an approximate 50 per cent increase in people considering taking out such a loan since this time last year.

"Some of these companies incredibly have APRs of a staggering 4,000%. Even at the rate of 1,737% a loan of £300 means paying back £375 if you borrowed the money for 30 days," said Mr Nuttall, UKIP's Deputy Party Leader.

"This type of loan plays on people's desperation and vulnerability and lending to people on benefits, is as it the case with some companies, is neither responsible nor just," said Mr Nuttall.