A payday lender has backed calls from MP’s to cap the cost of borrowing on high-cost credit products.
Gary Miller-Cheevers, chief executive of payday loan firm speedeloans.com, pledged support for a campaign led by Labour MP Stella Creasy to cap interest rates charged on products such as payday loans.
It follows a period of intense public scrutiny around high-cost credit, with charities and trade bodies expressing concerns that credit products such as payday loans can push consumers into an unsustainable debt spiral if used incorrectly.
The House of Lords will debate payday loans this afternoon, with Lord Kennedy of Southwark set to lead the discussion over whether consumers are adequately informed of the cost of payday loans.
Miller-Cheevers said one solution for all short term lending would be to introduce the cost of loans in monetary terms, rather than using APR or EAR, which is quoted for bank account overdrafts.
This he said, would allow customers to compare the actual cost.
“APR’s and EAR’s can be confusing for many customers – and also misleading,” he said.
“The EAR is the actual annual interest rate for an overdraft and doesn’t take into account fees and charges, while an APR does. How can customers compare borrowing money on a like-for-like basis when the APR means something different to an EAR? Maybe this is also something that should be investigated – transparency for all types of borrowing.”
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