84% of adults in the UK are in support of government plans to introduce a cap on the cost of payday loans, Amigo Loans has claimed.
However, the firm believes its research shows that such a cap may encourage some groups of people to take on debt. 12% of 18-34 year olds believe they will be more likely to take out a payday loan once the cap is introduced, and 9% of them believe they would take one out anyway irrespective of the cap.
Meanwhile, 82% think payday loan companies make it far too easy for people to take out a loan, while 86% believe payday lenders should be doing much more to ensure borrowers actually understand interest rates before agreeing to lend them money.
Research found 74% of Brits believe computer calculations don’t allow for sufficient checks to be made to ensure the information provided by the customer is correct prior to lending. 81% think loan companies should speak to customers instead to ensure loans are only given to those who can afford to repay.
17% of Londoners are more likely to turn to a payday loan following the cap, along with 11% people in the North East. However, only 59% of people in the North East strongly support the cap compared to 74% of people in the South East.
James Benamor, founder and CEO of Amigo Loans, said: “The Government’s cap reeks of gesture politics and while it might go some way to eliminate the crooks in the market, it won’t solve the bigger issues plaguing the industry which is clear guidance on affordability.
“Borrowing money can be a good thing and at cheaper rates an even better thing but it’s all academic if people can’t afford the repayments. The cap could be 0% and payday lenders will still be giving loans to people who shouldn’t be borrowing. The regulator needs to act urgently and offer clear guidance on affordability, and harsh enforcement against the worst offenders.”