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QuickQuid rollovers treated as new loans - is this legal?


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QuickQuid say this about their rollovers:

 

"How QuickQuid Loan Extensions Work

By extending your loan, you will only owe a finance charge on your next pay date, not the principal of your payday loan. The principal of your existing loan will be 'rolled over' into a new loan and you will be charged an additional finance charge. This will allow for you to wait until your next payday to pay off the full amount due on your loan. If you have a one-period loan, you will be able to extend your loan a maximum of five times. If you have a two-period loan, you may extend your loan a maximum of four times."

 

This means that if somebody uses the maximum five extensions on a one-period loan, they could get six defaults without borrowing any more money than what they borrowed in the initial loan! All they have done is extended the time they need to pay it back.

 

Indeed, on another site I post on somebody has posted and has received two defaults when they only took out one loan; one for the initial debt and one for the rollover.

 

Surely this can't be legal? Is it just a way for them to add lots of default fee charges to the debt?

 

Thank you in advance for any comments.

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