Payday loans 'need to be more transparent'

By Sarah Engle, Fri 18 Jun 2010 - Published in Loans

There needs to be more clarity over the fees and charges attached to high-cost credit options such as payday loans, it has been claimed.

Price comparison service Confused.com examined the websites of payday loan providers and found that some do not clearly display the extra costs attached to these products if they are used beyond their agreed period.

The organisation said that payday lenders should be encouraged to promote the use of free and impartial advice to their customers in the same way banks have to, while awareness of credit unions as a source of cheaper lending should be boosted.

Sharon Flaherty, editor at Confused.com, said: "More transparency is crucial so customers know exactly what they are getting themselves into when they sign up to these loans. We urge all providers to adopt this approach."

Recently, insolvency trade body R3 claimed that borrowers aged between 18 and 24 are more likely to ignore their bills and debt problems than older people.

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