Borrowers of "text message loans" are facing very high interest rates, an investigation has revealed.

TxtLoan - which offers customers the chance to get access to short-term credit via small loans of £100 a time, charges APRs of 994%, a financial reported.

TxtLoan has designed the service for short-term money access and offers credit of £100, to be paid back over a seven-day period.

However, the total cost of these loans comes to £110 and late payment charges can see costs spiral to £200, if it is not paid by day 23.

A TxtLoan representative pointed out that the loans were best suited to customers who face sudden emergency cash aid.

"The nature of the service makes it a viable alternative to incurring unauthorised overdraft charges," the spokesman said.

Therefore, consumers are being urged to consider cheaper forms of credit if there is a risk of missing repayments.