The Tories have accepted more than £100,000 from a company behind a "sub-prime" financial services business that lends to people with poor credit ratings at interest rates of 45% and, in some cases, almost 200%.

The donation was accepted just four days before the government voted down plans to curb the power of subprime lenders.

The sub-prime market comprises people who may have difficulty maintaining the repayment schedule. Sub-prime loans have higher interest rates and less favourable terms in order to compensate for higher credit risk.

Records lodged with the Electoral Commission reveal that the Funding Corporation Group Ltd (FCGL), based in Warwickshire, donated £105,000 to the Tories on 24 June. The company also gave £25,000 last December.

FCGL owns 99.9% of the Funding Corporation Ltd which sells cars on hire purchase plans to drivers with poor credit ratings through a subsidiary, ACF Car Finance. The Funding Corporation Ltd also owns a debt recovery business, Red2Black Collections.

The companies are ultimately owned by Lord Edmiston, a staunch Tory party supporter and Christian philanthropist, who gave the Conservatives almost £300,000 between 2004 and 2009 under his own name.

Labour MP Stella Creasy, whose private members bill to curb the power of sub-prime lenders receives a second reading on 14 October, said the Tories' decision to accept the donation offered little hope that they would tackle the consumer debt crisis.

"The government has been dragging its heels on getting to grips with this problem and every month they don't take action and make the cost of credit more affordable, more people are getting into debt," Creasy said. "Those of us watching this have been wondering why they are so slow to act."

Online forums contain quotes from people who express satisfaction with ACF's services. But others express anger at its high interest rates. Some complain they became apparent only once they had signed up to buy a car.

A saleswoman for ACF explained to the Observer that a typical interest rate on a loan would be disclosed only after a client's credit rating had been checked and they had visited a showroom.

For those with a poor credit history who want to make repayments over a long period of time, the interest rates, once extra costs such as payment protection insurance are factored in, can be extremely high.

One man described in an online forum how he nearly bought a £7,000 car from ACF that would have ended up costing him £325 a month over 60 months, a total cost of £19,500, equivalent to an interest rate of almost 200% [see footnote]. Another bought a car valued at £5,995. But the true cost when interest and PPI was factored in came to £16,445.

The Tories' decision to accept the donation is potentially embarrassing. In opposition, they pledged to clamp down on Britain's private debt crisis. Last month, the chancellor, George Osborne, noted that out of "all the world's major economies the UK saw the biggest expansion in debt over the past decade".

He explained: "That's because we had the biggest housing boom, the most indebted families."

Measures that would have forced the lenders to curb some of their practices, were voted down by Lib Dem and Tory MPs on 28 June. A spokeswoman for the Conservatives declined to comment about the donation.

• The following correction was published on 18 September 2011:

In "Tories take donations from firm behind 200% loans" (News), we noted that one man "nearly bought a £7,000 car from ACF that would have ended up costing him £325 a month over 60 months, a total cost of £19,500, equivalent to an interest rate of almost 200%." This is not an interest rate (which would be an annual or monthly figure) of 200%. It is a total interest payment of 178% of the original loan spread over five years, which would give an APR of just over 51%.