PAYDAY lenders and brokers are targeting college students ahead of the new academic year with short-term loans that charge up to 1,294% APR interest.
Costly creditors prey on students who would find it difficult to be accepted by a traditional lender due to their credit history or irregular income.
But their exorbitant interest rates could actually push skint students even more into debt.
The Sun found five payday loan brokers and one lender advertising loans to students who work part-time or are unemployed.
Sara Williams, who runs the Debt camel blog, called companies that target education professionals “disgusting”.
She told The Sun: “The students have low incomes and little experience in money management.
“Paying off a loan in the next term will often leave them with so little money that they may have to get another loan. “
As of 2015, lenders are limited to an interest rate of 0.8% per day, but the APR includes additional fees such as brokerage fees and closing costs.
Interest rates may differ from advertised rates depending on your credit history and circumstances, but high cost creditors charge extra fees for loans to “riskier” borrowers.
Broker New Horizons has a page on their website dedicated to student payday loans that compares regulated payday lenders based on an APR of 49.9%.
But it’s only when you click for a quote that you’re told some lenders charge up to 1,294% APR.
To put this in perspective, a personal loan from M&S Bank charges an APR of 2.9%.
Another site that has a dedicated student page is the Payday broker Pixie, where you can apply for a loan of up to £ 1,000 with representative interest rates of 728.9% APR.
How to get help if you are a university student
If you’re struggling to make ends meet in college, here are a few options you can consider:
Subsidies – You may be eligible for free money to help pay for books, equipment and other educational costs. You may also be eligible for a scholarship if you are studying a specific subject. For example, the Institute of Engineering and Technology (IET) Horizons Scholarships can help engineering and technology students. Use Finding Turn2us Grants to find out what you are entitled to.
Schematics – Students can get additional help from the government through Student Support if they are from a low income family, living with a disability or if you have children. You will need to speak directly to your university to find out what support it offers.
Advantages – You can claim benefits to supplement your income during your studies, but it depends on your situation. Employment and Support Allowance (ASE) and Housing Allowance are just a few of the payments you can qualify for. You can use the government benefit manager to find out if you can get help.
It’s a similar case with the My-Quick Loan broker who also advocates that students are likely to be accepted into a payday business as long as they have “some form of income”.
Meanwhile, broker Loanski encourages online loan application, which means you “don’t have to leave your dorm,” even though the APR can reach 305.9%, the same rate used by OMACL. .
Smart-pig.com specifically lends students amounts of up to £ 350 which must be repaid over a maximum of 180 days, but at a representative rate of 448%.
It’s the only company that caps the interest you repay at 50% of the amount you borrow.
Resolver’s money expert Martyn James called the practice of “trapping young people into debt” as “despicable”.
He added: “But banks and other lenders must also step up their efforts in offering help to those in difficulty.
“If you are young and have money problems, don’t borrow to get rid of your debt. Seek help – there is tons of free help. Don’t be afraid to say that you do. have difficulty. “
New Horizons has said it does not set interest rates and its website says students should only look for them “when they have no other option,” and as long as they are affordable.
A spokesperson said: “We don’t agree with pushing marketing to force students to apply for credit.
“Our site has a page answering a number of questions commonly asked by students looking for credits.
“This page will only be found by students who have already decided that they need access to credit and have searched Google or another search engine for it.”
A spokesperson for Smart-pig.com said, “Our loans are not installment loans, students borrow until their next student loan date, however, they can repay the loan at any time.
“Our loans have a ten-day grace period with no late payment fees, and our customer service team is always available to help a student who is struggling to repay a loan.”
Payday Pixie points out that it does not directly provide consumer credit products.
The Sun has contacted Loanski, My-Quick Loan and OMACL for comment.
Earlier this year, we revealed how loan sharks and payday lenders target areas where students live more than others.
Payday lenders have also been attack hardened parents and the imposition of 1,333% interest on children’s school materials.
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