Payday lenders are targeting skint parents and charging 1,333% interest on children’s school gear
CYNICAL payday lenders are targeting skint parents with loans for school uniforms — at interest rates of up to 1,333 per cent.
The loan shark-style firms’ websites feature editorials pushing high interest credit to cover “unexpected school costs” ahead of the new year.
But their exorbitant interest rates mean struggling parents could end up paying up to £500 for one child’s uniform — even though Government figures show the average cost of kitting them out is £213.
Labour MP Carolyn Harris accused the lenders of exploiting hard-up families.
She said: “The summer will have been expensive enough entertaining the children without having this thrown at them and building up debt.”
A Sun investigation looked at five sub-prime lenders, all offering advice on their websites to parents on meeting school and other costs.
The Sun On Sunday Says
THERE is little that swells a mum and dad’s pride more than seeing their offspring in smart new school uniforms.
So it is grotesque that money-lenders are targeting cash-strapped parents with exorbitant loans to buy school gear.
Some firms are charging 1,333% in interest rates, plunging vulnerable families into spiralling debt.
We have been here before with Wonga, the payday lender that became a toxic symbol of Britain’s household debt.
It eventually collapsed after accusations its loans were immoral.
The new pretenders to Wonga’s throne bombard hard-up mums and dads with promises of cheap loans to cover “unexpected school costs”.
In the end, anyone unwise enough to sign up ends up paying over double the average price of school uniforms.
In Wales, Scotland and Northern Ireland, parents are entitled to £150 grants towards a uniform.
Can it be right that mums and dads in many parts of England are left as prey to these vultures?
For example, Lending Stream says a “short-term loan could be used to cover the cost of a school uniform”.
But a £200 loan at an APR of 1,333 per cent will mean customers pay back £386.61 over six months.
The only lender to comment, Western Circle, which runs Cashfloat, said: “The interest rates reflect the risk of unsecured lending.”
Debt charities have called for struggling families to get more help with school costs. Those in Wales, Scotland and Northern Ireland are entitled to £150 grants for uniform but it is not a right in England.
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