Online adverts for credit - don't be misled

Online adverts for credit - don't be misled

Online adverts for credit may seem like a quick and easy option, some offer to give you an agreement in minutes and have money in your bank account within a matter of hours. Others allow you to apply for a loan via text message which they promise to credit to your bank account within minutes. They may offer incentives to make you apply, such as a free MP3 player or, claim to be able to lend to you when other lenders won't. However they may prove to be a very expensive choice.

There are strict rules laid down by the Office of Fair Trading (OFT) about how credit can be advertised. For example, in circumstances where lenders are offering incentives or implying that they may lend to you when other lenders wont they have to tell you the APR (the full cost of a loan) - see Related information for more details.

Payday loans

Many of the loans advertised online or via text are known as payday or paycheque loans. They are short term loans that you can take while waiting for the next payday. They may seem like a good way of getting your hands on your wages quicker than you otherwise would, but beware - the interest rates charged are often extremely high. Rates higher than 1000% APR are not uncommon. Compare this to the APRs of many credit cards that have typical rates of around 15 -20% or personal loans that have rates lower than 10% and you get an idea of just how expensive this form of borrowing is.

Shop around

Whenever you decide to borrow money make sure that you shop around and get the best borrowing available to you. This may mean putting a little more time into your research or waiting a little longer to get the money, but is time well spent. See Related information for our guide to Shopping around and for information on different types of borrowing.

Other lenders

If you are unable to borrow from mainstream lenders such as banks and building societies there are other forms of borrowing that you could consider, but beware of loan sharks – see

www.moneymadeclear.org.uk/products/loans/types/
other_borrowing.html#illegal_lenders.

You may be able to get a loan from the government's Social Fund if you're on a low income. Alternatively there are a number of other sources for example, credit unions, Community Development Finance Institutions, Growth fund lenders, Home credit (doorstep lenders) and Social Fund loans - see Related information.

Reporting misleading adverts

You can report misleading adverts about loans and credit to the Office of Fair Trading (OFT) - see Related information

Related Information

Shopping around

www.moneymadeclear.org.uk/guides/everyday/
shopping_around.html

Types of borrowing

www.moneymadeclear.org.uk/products/loans/
types_of_borrowing.html

Other borrowing

www.moneymadeclear.org.uk/products/loans/
types/other_borrowing.html

APR

www.moneymadeclear.org.uk/products/loans/what_is_apr.html

OFT Rules

www.oft.gov.uk/advice_and_resources/resource_base/
legal/cca/guidance

Consumer Direct

www.consumerdirect.gov.uk/before_you_buy/think_of/
borrowing-money

Report a misleading advert

www.oft.gov.uk/advice_and_resources/resource_base/legal/
misleadingadvertisements/what-is-it

Disclaimer
News articles on this website are accurate, to the best of our knowledge, only at the date of publication. If the information they contain changes, follow-up articles may be published.