There are no limits to usuary

The BBC news this morning reported a new study that suggests that millions of people in the UK are being forced to resort to "pay-day" loans. These are loans that are made with very little checking of the customers ability to pay, but which can charge interest at several thousand percent.  The payday loan companies are now a £2bn-a-year business, says BBC correspondent Andrew Hosken.

For an illustration of usuary at its worst, take a look at the Payday Loans site. They will provide up to £1000 for up to 30 days.

Here's "a representative loan example"

• Borrow £180 for 28 days,
• Total amount payable is £225.
• Interest rate p.a. 1737% (default)
• Interest payable is £45.

The fine print says "1737% APR Representative * The actual APR may vary from lender to lender."

That's right, they can charge whatever they like. 


They also note that the 30 day limit is not set in stone - "If you find that you wish to extend the loan then you can." Wonderful! Yes, that means that you can borrow £1000 right now, and if you can't pay back at the end of the month, no problem, you can keep running up more debt, and if you play your cards right, you can end up owing as much as £17,370 at the end of the year.

Now isn't that generous!

For a more complete view of what's available, have a look at the Bad Credit Good Solutions site that lists 25 different companies offering some truly fantastic deals. Quid Till Payday offers an APR of 2623.3%, Lending Stream proposes an APR of 3048.80% and Wonga offers an APR of 4214%. Clearly, there really are no restrictions - anything is possible.

I've got a suggestion. Instead of injecting £75 billion of quantitative easing into the financial markets and allowing them to do precisely what they want, why doesn't the UK government open a lending scheme that could help  the millions of people who are signing their own death warrants by getting caught up with these loan sharks?