I just tried it. I imagined I wanted to borrow £200 and pay it back over six months. Within seconds of typing in the postcode – no other information needed to get results – it fed back ten local organisations that might be willing to lend.

The cheapest, by far, was the local credit union. That would take 28 weekly payments of £7.64. The cost of the loan would be £13.64, which over that time works at an APR of 26.8%.

Which may sound high to the comfortably off, who have access to bank loans and overdrafts. But it is not at all high for those who want to borrow small amounts and whose credit rating is low. For instance, another lender’s schedule was 26 weekly payments of £12.50. So the loan cost £125 with an APR of 664.9%.

The priciest offer was from a firm that liked round numbers. You pay back the £200 loan in 15 weekly payments of £20. That’s a charge of £100 and an APR of 1564.2%. 

There’s so much to discuss in all this. There’s the chance to look closely at how APR varies depending on the payback period – which a lot of adults are hazy about. There’s also the terms and conditions of the loan, such as charges for late payments. 

The short form of the small print on the most costly offer goes:

Available to new and existing customers. All Loans subject to status. Tenants and Householders only. Loans not granted to minors or flats and buzzer entry accommodation. Written Quotations on request

Wonderful way to help young people build up an accurate picture of who they are dealing with, and how they work. 

Those working with young people, especially those not in education, employment or training, might want to adapt materials originally designed for the classroom. But no one has to reinvent the wheel.

Material is there, but not necessarily easy to find. So youthmoney is starting a series of quick pointers to usable, reliable, free materials.

Here’s the first, from Face2Face with Finance, designed for 14 to 16 year olds. It’s an online, flash-powered exercise in helping 21-year-old Becky, who works in a restaurant, decide how to borrow money for a car. Text version also available – print it off as notes if you are working away from a computer.

 Interest rates, when worked out in a proper annual percentage rate fashion, are at shocking, rub-your-eyes-in-disbelief levels. Not the single figures of an authorised overdraft. Nor the 20% or lower credit card rate. More like well over 150%.

People, including young parents, for example, go for these loans.  Not because they lack financial capability. Not because they are in dire need of remedial arithmetic lessons. They know very well that they are being exploited. Just as they know that 150 is a much bigger number than 20.

They go for them because they calculate they can afford the weekly repayments. And because they have no better option.

Are such high-interest loans legal? Yes.

But they don’t have to be. There is a case for introducing an interest-rate cap on home-credit loans. Other countries have one. Britain used to have one – 48% – until it was scrapped in 1974.

The Conservative party’s social justice policy group, chaired by Iain Duncan Smith, looked at the case for a cap. This week it made its recommendation. No. Caps would be a bad thing:

If ceilings were introduced, they would reduce the supply of home credit and in principle kill the home credit industry, and in fact the whole of the sub prime market. Furthermore, because of an excess demand for sub-prime consumer credit, illegal lenders would step in to fill the gap.

For more of this, download Volume 5: Serious Personal Debt from the policy group’s site.

It’s a point of view. It’s not one everyone agrees with. Try the material from Church Action on Poverty, founder member of the Debt on our Doorstep campaign network. There is a good analysis by accountant Richard Murphy of what needs to happen if a cap is introduced. See, too, the Debt On Our Doorstep campaign itself.

An illuminating Money Box programme looking at the reality and the options broadcast in April 2004 is still relevant and available. The Price of Poverty can be listened to or downloaded as a transcript.

Which is a great time to warn young people of what happens if you have a large debt and pay off only the minimum. Like, as Martin Lewis points out in today’s Sunday Times Money, it could take you forty years to pay off.

“Suppose Arthur Sixpence owed £3,000 on a high-street credit card with a typical rate of 17.9%. If he only made the minimum 2% repayments, his hair would bypass the grey stage and go straight to white because it would take him 40 years to repay, at an interest cost of £6,300.”  

For more Martin Lewis wisdom, see his money saving expert website.