Payday Loans Cheaper than Banks

Posted On: August 21, 2010 at 10:18 a.m.

Filed Under: cash advance consumers predatory lending

With the widespread rumors (and, in some cases true statements) floating around about the predatory lending that takes place in the cash advance industry, it might be easy to simply looks to banks instead to get the right interest rate on a loan that you need to hold you over for a few days. But a new report out of Great Britain suggests that even banks might be trying to gouge consumers. Here is the report: “Consumers who unexpectedly run out of funds are being charged more for short-term borrowing by some of Britain’s biggest banks than payday loan firms. Someone who needed £175 to tide them over for a week could be charged less than £20 to borrow from a payday loan firm. [[ads]] But they could end up paying more than twice the amount they borrowed if they use an unauthorised overdraft with Lloyds TSB. The number of people using payday lenders has quadrupled since the credit crunch began. The loans are designed for people who need to borrow cash for a few days before they are paid” (http://www.thisismoney.co.uk/credit-and-loans/loans/article.html?in_article_id=512311&in_page_id=53937&position=moretopstories). This, of course, serves as an important reminder that there are good and bad companies in all industries. We, as consumers, need to make the right choices by doing our homework and researching companies and loans first.