pay day loans

siraxeman

Like Quick Quid, Wonga etc advertised on TV.....12-1300% APR, how is that even legal? Makes my blood boil seeing those ads on the telly....nice ads that present them as a hero helping folks in need..then you read the small print at the bottom of the screen and then you realise they're robbers. I hate to see stuff like this - praying on the poorest/stupidest folks in society.

holnrew

http://www.independent.co.uk/news/uk/politics/top-tory-funder-runs-high-cost-loans-company-8656356.html

Hoof

As far as I know these sorts of loans are completely illegal in most countries with any sort of financial regulation. They target the poor, the irresponsible and exploit desperation. Many people who take out these loans don't honestly believe they can pay them back, lets face it, when you're out of options on how to keep the lights on and the kids fed the long-term affordability is a moot point. 

I wonder the percentage of the loans that actually get paid back within the terms? I also wonder if those who own these loan companies also have interests in firms of bailiffs etc. 

chrispy108

I don't think they're great.
But what's the APR of going £1 overdrawn on a bank account?

APR is a terrible way to measure the cost of a weeks loan.

DanR

The reason the Apr is high is that it's an Annual Percentage Rate that wasn't really designed for short term lending.

But as @Hoof pointed out if the payback is only say 50% of loans lent then you need to make sure you earn enough money back from the people who do pay back so your rate goes up.

I would expect the people who do default will at least pay back a couple of months payments so your loss won't be huge if you lend £250 at £80 a month to two people, one person pays all payments and the other pays back 2 then you get back £640 after loaning £500 so you're still up despite a defaulter.

Dominic

Send the boys round 'cos there's a note in the "persuasion book "
 Needs Doug and Dinsdale ............the Piranha Brothers

siraxeman

^^ Regarding defaulters, which of course every loan company will have to deal with regularly....I'd guess they don't just write loans off too easily and may persue a person through the courts and send out bailiffs to recover any assets that might offset or clear these loans? I'm aware they are supposedly intended as short term loans ie "till pay day comes" but I'd guess in many many cases that won't be really how repayments pan out in reality. I'm definitely of the opinion that they should be outlawed as they are praying on vulnerable/poor/stupid folks...same as stores like Bright House...just thinking about these vultures makes my blood boil. And to think I used to like that Wonga guitar video ad (above) I don't know how long I was watching it before I cottoned on to the small writing at the bottom of the screen.....

DanR

Chasing it I would think would be a few letters then bulk sell to collection firm who will buy the debt at a smaller amount then chase the rest.

It's got to be cost effective realistically and I can't see small amounts being worth the cost to chase.

Dominic

They are Robin Hood in reverse.....................take from the poor and give to the rich

Flink_Poyd

siraxeman said:

same as stores like Bright House...just thinking about these vultures makes my blood boil. And to think I used to like that Wonga guitar video ad (above) I don't know how long I was watching it before I cottoned on to the small writing at the bottom of the screen.....

These fuckers have a store in my town, plus I deliver to one in Birmingham. I honestly feel sorry for some of the people who work there, they must know this is "wrong" but need a job to support themselves/family. 

BenSirAmos

If the major banks hadn't all fucked off from our high streets, perhaps they could provide a service to the poor. But if you leave a vacuum on the high street, it will get filled. 

When I've been in similar places to these pay day loan businesses, they treat their customers with respect. People feel welcome - and they understand that if they don't pay up on pay day, they will get in trouble. 

So let's get the high street banks back on the high streets and insist that they provide a service for everyone and that they treat everyone with some respect - and then there won't be a need for pay day lenders.

siraxeman

Dominic said:

They are Robin Hood in reverse.....................take from the poor and give to the rich

Souds lke the tories that!

BigBearKris

This is so upsetting for me that I just want to walk up to the edge of the Earth and jump...

Dominic

What,the bad joke about the Tories or the Pay day loan people ?
Aren't these loan shark operations very strictly legislated now ?

Myranda

They're legal because they serve a purpose to some. 

Your car blows up a week before payday needing a new gearbox, you have no credit card (or its maxed) and you have no overdraft left... Do you not go to work - might mean not getting paid, or do you take out a loan for a week? 

If you're only borrowing for a week then it's 1/52th of 1300% - still not cheap, but it might be cheaper than the loss of earnings caused by an unfortunate event... They could even be regarded as necessary pressure releases... Some people won't have wealthy patents/family to help out, or savings and can't wait for a gofundme to pop on Facebook 

Now, where these fall apart is when the money isn't repaid in a reasonable time... And a tiny borrowing balloons into a stupid debt. Where legislation needs to be created is in a system that calculate a fair point to close the loan and convert it to a "debt" with a more reasonable interest rate and automatically mails out a fair repayment plan. For instance you borrow for a week, but 4 weeks later haven't paid it back, so it closes the account and changes the interest rate to 25%, mailing you saying you can pay 1/10th of the debt for the next 11 months... That way no one would end up owing more than 10 times what they borrowed in less than a year... 

RobDavies

My Dad has volunteered for the CAB as a debt councillor for a number of years now and payday loan companies are his biggest bugbear.  
He did manage to get his local MP to ask questions in the house about how they are allowed to operate, and I believe that things like T&C's did change slightly for the better afterwards.

Thing is, to naive minds, places like Bright House look like a pot of gold - I've even heard my son say that he couldn't wait to get to 18 so he could go to Bright House and buy a massive tele for his room because "you only have to pay a few quid every week". 

Needless to say, some knowledge was imparted.... But when I was 18 or so, if there'd have been a Bright House that sold guitars and amps, I'd have been up to my eyes in it.  

TheBlueWolf

No matter how skint I get I refuse to go near these types.

Dominic

Exactly..........naiivity is their best friend and the younger society is still at an age where they see skipping a payment as being akin to getting away with not doing your homework ! Unfortunately the loan companies don't see iy like that.
 They almost encourage a certain amount of default as they revert to higher rates and charges which is the cream on the cake for them.

axisus

The sad thing is that there are people who are in a position that makes them turn to this stuff. I'm amazed that anyone wants to get paid to advertise stuff like this.

Emp_Fab

But it's the free market so beloved by the Conservatives isn't it.  If I want to sell curry flavoured bungalows made from rubber and dried orphan meat at £5M/m2 then, if there's a market for it, I should be able to.

The fact is that there is a market for these companies - and it's poor people.  Put them in tower blocks clad with cheap shit that burns, get them locked into paying you money forever for a £200 loan etc.  Fuck 'em, they've only bees.

TheMarlin

They target low incom families, and count on people loaning a bit, not being able to manage, and loaning more and more month upon month.  
Parasites.