Reply to: Payday loans set for parliamentary vote

[AtW]

I'm just jealous - I'm lending at 7.4% on Zopa - I'd be happy with 70% let alone 4,000%



DimPrawn

FTFY

[Zoiderman]

Thats why you're not making your millions in the world of finance

As NLUK pointed out, the APR only looks so bad because these are very short term loans. It's still cheaper than some banks overdraft charges

The real problem is when customer start rolling the debts over ever week/month. But if you introduce efforts to tackle that then the side effects will impact either the consumer or the industry or both. A significant proportion of these customers WILL take the piss given the chance.

I know why the APR looks bad, it's why I am suggesting it is important to keep stressing it...

For me, loaning relatively low amounts of money to people desperate for it, is taking the piss out, for the 100 loan to pay back £120, becomes the 120 loan to pay the 150, which..., etc, etc, etc

Its feeding the dog its tail and some people need protecting from their own stupidity. Darwinism stopped properly working the moment we put together the welfare state

[Spacecadet]

If someone I didn't know, was that desperate to borrow £100, that they were willing to take on a debt repayment of over 4000% APR, I would not loan them the money, as they would be very high risk, imo, and desperate

Thats why you're not making your millions in the world of finance

As NLUK pointed out, the APR only looks so bad because these are very short term loans. It's still cheaper than some banks overdraft charges

The real problem is when customer start rolling the debts over ever week/month. But if you introduce efforts to tackle that then the side effects will impact either the consumer or the industry or both. A significant proportion of these customers WILL take the piss given the chance.

[MarillionFan]

But I think thats the point; you're feeding the dog its tail

People see money in different ways.

If you gave £100 to a Scouser, a Russian, a Glasweigian & a Tottenham fan the following would happen.

The scouser would go out buy a tulip load of booze & get ratarsed waking up the next day skint, stinking of vomit with a black eye.

The Glasweigian would go out buy a tulip load of crack and chase the dragon waking up the next day skint, stinking of piss with bruised knuckles.

The Russian would have stayed in on his sofa, hiding the money under the bed before waking up the next morning to discover that the Scouser had broken in during the night, stolen his money, been sick on the sofa & stolen his last potato before being mugged by the Glaswegian on the way home who'd then spent the money on more crack.

The Tottenham fan would have everyones money, a load more booze, some crack, & would be offering finance but would be lamenting the fact they weren't going to get into next seasons Champions League.

Hope that makes it clear for you.

[northernladuk]

I understand what he is saying, and he's right, to a point, but the more you reduce the amount payable, then the more attractive, legal, it sounds. A loan shark charging £30 over a fortnight also sounds fine, but it really isn't, as you are targetting simple people who don't really just how large the numbers are.

Can't argue with that really. I don't agree either but I don't think the problem is the APR, it is the whole model of who they target as you say. It is the whole industry and solution that is the problem.

[Zoiderman]

How much would you charge to lend someone £100 for two weeks if you were a business?

If someone I didn't know, was that desperate to borrow £100, that they were willing to take on a debt repayment of over 4000% APR, I would not loan them the money, as they would be very high risk, imo, and desperate

Halifax tried this a couple of years back, 'simplifying' charges in that they were charging, in some cases, 3000% apr and they were rightly lambasted for it.

[Zoiderman]

I agree with all that. And I think NLUK will too (NLUK - feel free to flame me - but no -ve rep please!). But NLUK's point is that it is just not worth it from the loan company point of view - they have to change alot more than £1.50 to make it worth their while.

Personally I would rather cut back on everything except food and heat rather than get into debt.

I understand what he is saying, and he's right, to a point, but the more you reduce the amount payable, then the more attractive, legal, it sounds. A loan shark charging £30 over a fortnight also sounds fine, but it really isn't, as you are targetting simple people who don't really just how large the numbers are.

[SupremeSpod]

How much would you charge to lend someone £100 for two weeks if you were a business?

How likely am I to get the money back?

[northernladuk]

For me its a clear indicator in how much this is costing you. Loaning £100 and paying back £15 a fortnight later, sounds fine, but it isn't. 390% may sound good, but it isn't. It is a tulip load of interest. I understand the business model, but it is a lot of money for a section of society who can't afford it. Seriously, if you are desperate enough to pay 4000% on a short term loan of £100, you are already up tulip creek, putting an extra 390% on that debt is taking away the paddle.

I still maintain it is good practise to look at the yearly costs of loaning the money, as otherwise, you can start defending it.

How much would you charge to lend someone £100 for two weeks if you were a business?

[Zoiderman]

Some people can't even spell 'yearly' let alone plan their finance that way. Lending someone £100 when they are super high risk and wanting £115 back at the end of the week if absolutely fine. It needs to be an amount relevant to the risk.

But I think thats the point; you're feeding the dog its tail

[BrilloPad]

For me its a clear indicator in how much this is costing you. Loaning £100 and paying back £15 a fortnight later, sounds fine, but it isn't. 390% may sound good, but it isn't. It is a tulip load of interest. I understand the business model, but it is a lot of money for a section of society who can't afford it. Seriously, if you are desperate enough to pay 4000% on a short term loan of £100, you are already up tulip creek, putting an extra 390% on that debt is taking away the paddle.

I still maintain it is good practise to look at the yearly costs of loaning the money, as otherwise, you can start defending it.

I agree with all that. And I think NLUK will too (NLUK - feel free to flame me - but no -ve rep please!). But NLUK's point is that it is just not worth it from the loan company point of view - they have to change alot more than £1.50 to make it worth their while.

Personally I would rather cut back on everything except food and heat rather than get into debt.

[MarillionFan]

For me its a clear indicator in how much this is costing you. Loaning £100 and paying back £15 a fortnight later, sounds fine, but it isn't. 390% may sound good, but it isn't. It is a tulip load of interest. I understand the business model, but it is a lot of money for a section of society who can't afford it. Seriously, if you are desperate enough to pay 4000% on a short term loan of £100, you are already up tulip creek, putting an extra 390% on that debt is taking away the paddle.

I still maintain it is good practise to look at the yearly costs of loaning the money, as otherwise, you can start defending it.

Some people can't even spell 'yearly' let alone plan their finance that way. Lending someone £100 when they are super high risk and wanting £115 back at the end of the week if absolutely fine. It needs to be an amount relevant to the risk.

[d000hg]

Bridging loans are currently running at around 15%

Depends what you're bridging and for how long. Nobody is going to make money lending at 15% for a couple of days. Far too much work involved for the return.

But why can't people just wait for what they want or take some out of their savings?

I know that these days you whipper snappers are up to your necks in debt - but when I was a young lad credit was called the "never never".

I thought never-never was hire-purchase? Before my time though. there's a big difference between:

- Buying something expensive on HP
- A loan of a few days to cover a scheduling screwup or purchase you need to make
- Taking credit to buy things simply because it's offered, and not expecting to have the money to pay it back

[Zoiderman]

I dont agree if you really borrow the money for 2 weeks. But if you can't pay back and borrow for a year then, of course, I agree with you totally.

For me its a clear indicator in how much this is costing you. Loaning £100 and paying back £15 a fortnight later, sounds fine, but it isn't. 390% may sound good, but it isn't. It is a tulip load of interest. I understand the business model, but it is a lot of money for a section of society who can't afford it. Seriously, if you are desperate enough to pay 4000% on a short term loan of £100, you are already up tulip creek, putting an extra 390% on that debt is taking away the paddle.

I still maintain it is good practise to look at the yearly costs of loaning the money, as otherwise, you can start defending it.

[Sands of Time]

I'm just jealous - I'm lending at 7.4% on Zopa - I'd be happy with 70% let alone 4,000%



Tone