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Consumers warned against guarantor loans trap

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A Government crackdown has seen payday loans made subject to regulation but it does not apply to guarantor loans.

These are targeted at those with poor credit ratings and whose only option is to ask a friend or family member to act as a guarantor.

Dozens of companies offer loans of up to £12,000 for up to seven years at APR s as high as 54.9 per cent.

Payday loan interest is now capped at 100 per cent of the original sum. Guarantor loans are not capped. Labour MP Stella Creasy said: “They are a trap.” 

Source: Sunday Express

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