Charity fears Covid debts will lead millions to tantalizing 2,000% loans

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A charity warns that up to three million people could drown in debt because of the pandemic.

StepChange is also concerned that struggling Britons will turn to loans with exorbitant interest rates of almost 2,000% to fund the holiday season as they grapple with money problems.

Dot Dot Loans offers between £ 200 and £ 4,000 with a maximum annual interest rate of 1,959%.

Rival Choose Wisely offers loans between £ 300 and £ 5,000, but borrowers could face APR rates of 1,571%. The Oakham lender also charges up to 1,421 percent. And at Bingo Loans, people can get anywhere from £ 50 to £ 1,500, but face a maximum rate of 1,261% per annum.



Those in debt should seek help from a reputable charity with debt counseling (stock photo)

Sue Anderson, of StepChange, said: “We estimate that at least one million people affected by the coronavirus have taken out one or more forms of high interest credit, including payday loans, to make ends meet.

“Additional pressures around the holiday season may well see this increase. APRs as high as 1900% illustrate the risk of harm.”

The charity is urging people to seek help from a reputable charity for debt counseling, as it fears 2.87 million people may be in long-term debt.

Meanwhile, a study from money.co.uk found that 51% of adults were in debt this year.

The 9.4 million workers on leave have borrowed an average of £ 1,050 each, which means a mountain of debt of £ 9.87 billion.

Dot Dot Loans said average loans last over 6.9 months instead of a full year, meaning the average interest rate was 785%.

Choose Wisely said it was helping users compare a range of loans to “improve the financial inclusion of the underbanked.”

Oakham and Bingo Loans did not comment.

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