Payday Loans are the Hit And Run of Financial Products

BOURNEMOUTH, England, July 18, 2012 /PRNewswire/ --

Millions of people are risking their financial future by taking out payday loans - even if they pay them off on time.

GE Money has confirmed it will no longer consider applicants who have taken out a short-term, high-interest loan once in the past three months or more than twice in the past year.*

In further evidence that payday borrowing can impact a person's ability to use other financial products in the future, Experian is now specifically listing payday loans separately. Previously it provided a more generalised overview of a person's borrowing history.

The developments mean consumers need to be even more cautious about the financial products they choose, or risk compromising the choices available to them in the future. 

Amigo Loans, which lends flexibly at 100th of the APR of some payday lenders, says GE's decision to exclude mortgage applications from people who have had a payday loan is further evidence of the destabilising and potentially devastating effect payday borrowing may have.

Amigo's founder and CEO, James Benamor, says:

"While it is not fair that banks have stopped lending to good people, consumers need to be made aware that there are other safer and cheaper options beyond payday. 

"This is the strongest sign yet that other financial services providers are recognising the 'hit and run' effect that payday lending has and the destabilising risks it brings.

"The likes of Wonga can spend millions on advertising and glossy marketing because they charge the earth. Consumers need to be aware there are better options available to them, so that they can avoid a financial nightmare with long-lasting, devastating consequences"

While there aree often genuine reasons why people need to borrow quickly, using payday loans could cause serious problems in the future for millions of consumers. But, taking out and paying back longer-term loans and credit cards has always been considered one of the best ways to rebuild a damaged credit score. 

 About Amigo Loans

• Amigo Loans offer complete flexibility - with daily interest at a 100th of the APR of that of payday.
• Although Amigo Loans are always granted over a term - such as 12 months - there are no fees and interest is charged daily, meaning they can be used in the same way as a payday loan. Borrowers who repay after 30 days will only pay 30 days' interest at 49.9% compared to Wonga's typical APR of 4,214%.
• Amigo Loans says guarantor loans are a more responsible form of borrowing because of the social aspect.The guarantor (typically a family member) not only validates that the borrower can repay, but also that borrowing is in the applicant's best interests.

• Amigo Loans is the UK's largest guarantor loans company, offering medium term loans up to £5,000 over a one to five year period
• Amigo Loans is one of the cheapest alternative loans providers in the market with highly transparent rates that are easy to understand
• Amigo Loans offers an alternative way of borrowing money for people who are ignored by, or can't access credit through the banks
• Amigo Loans works on the basis of trust, not credit scoring, to offer loans using friends and family as guarantors
• Amigo Loans is powered by The Richmond Group
• Further information is available at http://www.amigoloans.co.uk

About the Richmond Group

• Established in 1999, The Richmond Group is an alternative finance company operating a number of branded finance companies
• The Richmond Group develops its products and services for those who've been turned down for mainstream credit provided by the high street banks.  With constant innovation it seeks to disrupt the markets in which it operates
• The Richmond Group employs more than 200 people at its headquarters in Bournemouth
• The Richmond Group has featured in the Sunday Times Best Places to Work. The Richmond Group has also appeared in The Sunday Times Fast Track and Profit Track Leagues.

*http://www.mortgagestrategy.co.uk/latest-news/payday-loan-history-threatens-mortgage-applications/1054360.article#comments

SOURCE Amigo Loans