Lenders Urged to Offer More Bad Credit Loans

Lenders are urged by consumer groups to increase availability of unsecured personal loans for borrowers with poor credit history.
Consumer groups have started to call on lenders after the Office of Fair Trading (OFT) reported that the market consisting of lenders offering payday loans or other loan types designed for consumers with bad credit was functioning in an effective way.
Marie Burton from Consumer Focus says it is wrong to make people in financial peril pay so much. Such a situation will lead to increasing number of people resorting to loan sharks.
Since the OFT's report demonstrates that it would be practically impossible to increase competition among high-cost loan providers and drive more beneficial deal for borrowers, the Government should take some measures to enable lower-cost borrowing.
However, payday loan providers claim they are not aimed at vulnerable customers. Ohad Hessel from Payday Bank, a lender specializing in payday loans, commented that their company was often the only lender providing those refused credit with emergency financial assistance. He believes that an APR is not the right metric to judge payday loans due to the fact that the average borrower needs money for a couple of days only.


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