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Payday Loans - Cap will encourage borrowing

Your Money, 16 Dec 2013

A cap on the cost of payday loans will encourage some groups of people to take on more debt, a new report has found.

According to research from alternative lender Amigo Loans, while the majority of Brits (84%) welcome the Government's proposed cap, one in ten 18-34 year olds are more likely to take out a loan as a result of lower charges, while 9% would take one out anyway irrespective of the cap.

In November, the Government announced plans to control the costs of payday loans amid fears lenders were trapping vulnerable borrowers in debt.

However, the Amigo report found that the majority of Brits felt the proposed cap does not go far enough to tackle the problems of bad debt due to payday loans.

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