Britons forced to repay 4,000% loans

A British charity has warned that millions of hard-hit families across the UK are forced to take payday loans with interest rates as high as 4,000 percent to pay their mortgages or rent.

The charity Shelter said in a report that almost one million desperate families turned to the extortionate “instant cash” loans in the last 12 months.

According to the report almost seven million ­householders overall in UK are relying on payday or other high-interest arrangements, including credit cards, to fend off eviction.

“The UK is the crock of gold at the end of the rainbow for the world’s payday lenders”, said Martin Lewis of MoneySavingExpert.com.

“They have been regulated out of other countries and jump for joy at our lax supervision. That’s why these 4,000 per cent APR lenders are exploding across British high streets; Lewis added.

“Yet these astronomical interest rates aren’t the real danger – that comes from the ­rollover. This is where people can’t repay at the end of the month and compound interest kicks in”, added the expert.

A £500 loan, for instance, could soar to £681 even by next payday, and then rapidly multiply if the borrower was still struggling.

“It’s a temptation to grasp these loans as a lifeline, but in the long run it may hurt,” said Mr Lewis. ­Shelter’s Campbell Robb said: “Debts on payday loans can quickly snowball out of control, ­ultimately leading to homelessness.

“Every two minutes someone in Britain faces the nightmare of losing their home. We urge everyone now relying on credit to help pay their rent or mortgage to urgently seek advice.”