Today, Dave Thompson, MSP for Skye, Lochaber and Badenoch will raise awareness of the dangers of high interest rate credit in his constituency. Speaking in the Scottish Parliament in a debate on payday loans, Mr Thompson will support stronger loan regulation to protect consumers.
Payday loans are becoming increasingly popular amongst those in the Highlands who do not have access to mainstream credit or who want a ‘quick fix’. But slick advertising and attractive promises of quick cash often hide extortionate interest rates.
Mr Thompson will attack interest rates which can be in the region of 4000%. The repercussions of taking out a payday loan last indefinitely as repayments soon become impossible. In the last year, the number of people choosing payday loans online and on the high street has risen dramatically in Skye, Lochaber and Badenoch.
Mr Thompson will say, ‘More and more desperate Scots are drowning in the deep sea of debt. For those who find themselves in dire straits, payday loans promise short term relief. But, payday loans are a dream today and a nightmare tomorrow as interest rates increase the loan rapidly.’
“Rather than choose a payday loan, I would encourage my constituents to consider joining a Credit Union. These are non-profit making financial co-operates. Savings are pooled together to be used as a common fund from which members can apply for loans.
Note:
Ms Burgess’s motion below:
Motion S4M-01558: Margaret Burgess, Cunninghame South, Scottish National Party, Date Lodged: 12/12/2011 High-interest Payday Loans:
That the Parliament notes with concern the recent report from R3, the trade body for insolvency professionals, regarding high-interest payday loans; understands that the report suggests that there is a likelihood that many people have turned to such loans as a last resort in the run-up to the Christmas period; highlights that the report also claims that the interest rates on such loans can be up to 5,000% per year and that the payday loan sector is worth £2 billion; notes that the UK Government could introduce stronger crisis loan regulation to protect consumers, especially vulnerable people, and that it could tackle the issue of dishonest and irresponsible lending; further notes that that those in need of assistance can seek advice from National Debt Line Scotland or their local citizens advice bureau or money advice centre before taking out such loans, and welcomes the development of credit unions such as the Kilwinning-based 1st Alliance, which, it understands, offers affordable credit and encourages saving.
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