The firm pointed out that some lenders charge up to four per cent in interest per month should a borrower fail to meet their payment schedule.
It also warned that some lenders are acting to conceal the size of their default rates by setting a very high standard rate which is then discounted if a payment is made on time, effectively using that high standard rate as the default charge.
Mark Posniak, managing director of Octane Capital, said lenders should be working with borrowers who are struggling, rather than imposing charges which are “not just greedy and self-serving but myopic”.
He added: “I suspect some lenders are doing this because competition in the industry means margins are being squeezed and so default interest rates can be an instant boost. It’s almost as if they want borrowers to default.”
Posniak urged brokers to be cautious and to thoroughly check the small print of any deal they go for, noting that the current slow-moving market is putting clients under greater pressure.