A church anti-poverty group has criticised Bradford door-step lender Provident Finan-cial over its "extortionate" interest rates on some loans being offered this Christmas.

Provident, which has a million UK customers, is offering to lend money at annual interest rates of up to 365 per cent.

A typical loan of £350 obtainable from Provident Personal Credit online paid back over 55 weeks would eventually cost £577.50 - an interest rate (APR) of 177 per cent. The higher rate applies to shorter-term loans paid back over 31 weeks.

Neil Cooper, the National co-ordinator of Church Action on Poverty, accused doorstep lenders of targeting people with a poor credit rating who did not have access to other sources such as high street banks.

"Coming up to Christmas people with no money want to buy stuff and will turn to anyone who can lend them money," said Mr Cooper. "Provident lends at extortionate rates."

Today Provident robustly defended its lending strategy and argued there was a clear demand for such loans.

"The key thing is that home credit has to put all its charges into APR so we can look high compared to banks," said a spokesman. "But there will be 55 visits to collect payments. If they miss a repayment they don't get charged a penny more than they agreed at the outset.

"APR isn't a good way of comparing the cost of a loan. With home credit you know what you are borrowing and what you're paying back. It works for the way our customers budget."

Bradford Credit Union, which helps 2,500 people financially, said it found the Provident rates disappointing. Manager Malc-olm Hey said: "If people joined the credit union they could apply for loans at a rate of 12.7 per cent APR on a loan of £500 over a year. This could save them £392 in interest."

Bradford South MP Gerry Sutcliffe, the Government minister steering a new Consumer Credit Bill through Parliament, said the new legislation would ensure transparency of loans so borrowers knew what they were being charged. He said: "Lenders will have to explain the APR so the consumer is in full possession of the facts."