As reported on MortgageIntroducer.com yesterday Amigo Loans had issued a warning about the high cost of short-term, high APR finance being billed as an alternative to payday loans.
But Boulger said given Amigo Loans insists on a guarantor, which it requires to have a good credit rating to underpin the loan, its products were “extraordinarily expensive”.
He said: “Amigo’s comments about payday lenders are a bit rich given a standard unsecured high street loan can start from 5% but Amigo’s rate is in excess of 40% and has an APR of approximately 50% even with a credit worthy guarantor underpinning the loan.”
Amigo Loans has responded by defending the pricing of its loans by saying its product is a “far healthier alternative” to using a payday lender.
A spokeswoman for Amigo Loans said: “We're lending at one hundredth of the rate of payday lenders. Borrowing £500 from us for a year costs the same as borrowing £500 for two or three weeks from a payday lender.
“In our experience taking a payday solves nothing as the borrower is in a worse position just 30 days later.
“Amigo does not have any fees or charges and our APR is honest and transparent.”
Amigo Loans claimed what a borrower more often needs is to borrow more, over a longer period with completely flexible payment options.
It said 40% of its customers pay the loan back early meaning they pay back a lot less and the real APR is reduced.
She said: “We're far more comparable to the likes of Halifax than we are payday lenders, 29% before fees and charges versus 49% without any.
“I think you'll agree that's closer than comparing us to payday in its 5000% mark!”
Amigo Loans said it can be used as an alternative to payday, as it is much cheaper, if that is what customers wanted as the lender offers borrowers to pay off the loan after one day if they choose to.
The unsecured lender said the price of its loans was justified because it reflected the costs associated with offering such a personalised one-to-one service, building deep and long-term relationships with its customers which it compared to a credit union.
She added: "Their rates are comparable to ours and as of next year will be very close. All profit is reinvested back into the business to lend to other customers."
