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Secured loans providers 'ignoring new rules'

Secured loans providers 'ignoring new rules'

Category: Loans

Updated: 07/07/2009
First Published: 26/11/2008

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Some secured loans providers have been granting high-interest deals without carrying out credit checks, it has emerged.

The Daily Mail reports that young people are being targeted on social networking websites, with firms promising quick and easy cash.

But despite new rules introduced earlier this year stating that lenders should carry out appropriate checks to ensure borrowers can afford to repay, the paper notes that some are failing to do so.

"We are starting to see a vicious downward spiral. Now legitimate subprime lenders have been driven out of the market, borrowers are being forced to use less responsible subprime lenders," Neil Munroe of credit rating agency Equifax was quoted as saying.

One company - Logbook Loans - was found to be offering loans secured against a car with an interest rate of 437.4 per cent.

Prime minister Gordon Brown recently expressed concern over high credit card interest payments, noting that one company was charging 200 per cent.

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