New Text Loan Service Launched

Fri, 27 Nov 2009

Consumers are being warned of the cost of a new personal loan service from TxtLoan. Borrowers can obtain loans by texting the company, who promise that the money will be in their accounts within minutes. The company claims to offer a vital service to hard up borrowers, with loans useful in situations where consumers are faced with unexpected bills. However, there is evidence of the service being used flippantly, with one borrower admitting to using the service whilst in the pub.

The £100 loans are repayable after seven days, at which point borrowers must repay £110, translating to an interest rate of 994 per cent. In addition, there is a handling fee of £1 for each text message sent requesting a loan, and a one off £1 registration fee.

While the interest rates may seem acceptable, the costs quickly rack up for borrowers who are unable to pay after the allotted week. An ‘overdue reminder’ is sent on day nine, with notice of a £25 administrative and transaction fee, before another £25 fee is added on day 11. Further fees are applied on days 16 and 23, before the company refers the matter to its collection department on day 46 by which time the loan has swelled hugely. Consumers are thus being urged to consider cheaper forms of credit if there is a risk of missing repayments .
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