Consumers warned over rise in new payday lenders

With recent research anticipating that payday loans borrowing is set to triple in the next five years, potentially bringing new lenders in to the market place, an industry expert has warned consumers to take care when choosing their payday loan provider. With interest headline rates up to 2,700% APR, payday loan providers are often blasted for charging extortionate rates.

However Gary Miller-Cheevers, CEO of payday lender speed-e-loans, has suggested that this figure can be deceiving, as most payday loans last for a few weeks rather than a full year.

He has said: “APR for payday loans is a bit like Tesco’s pricing sausages by the ton.”

Figures from Datamonitor show that £1.2 billion was borrowed last year through payday loans, with analysts reckoning that these figures will soar to between £2.7 billion and £3.5 billion a year by 2014.

Mr. Miller-Cheevers, has warned that with new lenders coming in to the market place, all customers should be wary of whom they apply to.

“With increased competition comes choice - which is a good thing,” he said. “However, at the same time, cash-strapped consumers should very carefully look at who they’ll be doing business with.”

Research from speed-e-loans has revealed that 50% of its customers are white collar workers and professionals, including Accountants and Financial Advisers – ironically, people who traditionally take care of other people’s money for a living.