Reply to: What happens if you have the cheek to try and charge people 4000% interest?

[vetran]

No wonder this country is fooked.

If people are short of money then do without. A bit of financial planning would help.

You earn below the average wage, your car that has been limping along (and fixed up) for years blows up, you can't get to work. You need to borrow £500 to buy another wreck, obviously you need better financial planning.

Your gas bill comes in and its school start do you buy £200 of school mandated clothes so your kid isn't called into the office every day or do you pay for gas to cook the kids dinner?

don't talk tulip. its a different world, its not choosing between going to Turkey or Antigua for holiday. Does my new car have built in GPS or do I buy a stand alone one?

[stek]

There was an example on the radio about how misleading APR can be, I forget the figures but it was something like say you borrow £20 off you mate, pay back a week later and reward him with a pint, you've ended up paying something like 2000% APR...

[BrilloPad]

No wonder this country is fooked.

If people are short of money then do without. A bit of financial planning would help.

[SimonMac]

Why doesn't the government operate a similar scheme?

Because places like Wonga can stream line their operation to keep overheads to a minimum, the Govt would never be able to run as efficiency.

[gingerjedi]

Why doesn't the government operate a similar scheme?

[Bunk]

Yes you can - as thats what the APR is for - its to compare the cost of loans.

I used to be a volunteer director of a credit union - we'd charge 11.9% APR no matter what size of loan. For some reason (lack of advertising budget due to not charging extortionate rates) we never manageed to attract anywhere as near as many people as we expected. Actually I know the real reason but could never convince the other directors - the words credit union are off putting - sounds very official and "expensive". If we'd have called it "CheapCash.com" instead of "BlahdiBlah Credit Union" we'd have helped thousands not hundreds. Still...

I'd love to see credit unions getting a much bigger share of the lending pot as most of the people who work for them don't just want to make money, they give up their time and energy to try and teach people how to save and budget so they don't need borrow in future.

What would the APR be on one of those loans if they only wanted, for example, £100 for 5 days? Would it still be 11.9%?

[Ignis Fatuus]

Yes you can - as thats what the APR is for - its to compare the cost of loans.

I used to be a volunteer director of a credit union - we'd charge 11.9% APR no matter what size of loan. For some reason (lack of advertising budget due to not charging extortionate rates) we never manageed to attract anywhere as near as many people as we expected. Actually I know the real reason but could never convince the other directors - the words credit union are off putting - sounds very official and "expensive". If we'd have called it "CheapCash.com" instead of "BlahdiBlah Credit Union" we'd have helped thousands not hundreds. Still...

I'd love to see credit unions getting a much bigger share of the lending pot as most of the people who work for them don't just want to make money, they give up their time and energy to try and teach people how to save and budget so they don't need borrow in future.

I did read an interview with the guy who owns Wonga.com, and he said that the majority of their customers would qualify for loans elsewhere, but they come to wonga.com because they can get an instant decision without facing someone or having to answer questions.

I believe him. And I despair for what that implies.

[northernladuk]

Yes you can - as thats what the APR is for - its to compare the cost of loans.

I used to be a volunteer director of a credit union - we'd charge 11.9% APR no matter what size of loan. For some reason (lack of advertising budget due to not charging extortionate rates) we never manageed to attract anywhere as near as many people as we expected. Actually I know the real reason but could never convince the other directors - the words credit union are off putting - sounds very official and "expensive". If we'd have called it "CheapCash.com" instead of "BlahdiBlah Credit Union" we'd have helped thousands not hundreds. Still...

I'd love to see credit unions getting a much bigger share of the lending pot as most of the people who work for them don't just want to make money, they give up their time and energy to try and teach people how to save and budget so they don't need borrow in future.

But they do not cater for yearly loans as that is not part of their business model so they are being required to post something that they do not really do so it is misleading for them. I don't agree with it don't get me wrong but still, its not an accurate comparison.

[vetran]

This'd be a nice place to live if only I could afford it. But then, I'm not on benefits.

Somali family on benefits handed keys to £2million luxury 'council' home on one of London's most affluent streets | Mail Online

well that's an example of the council being muppets, it doesn't invalidate my point.

We have loaned similar amounts and done favours for lower earners, we have had 2 defaults in 10 years. But in some cases we had to offer forcibly, some people are proud to the point of foolishness or don't have well off friends Wonga preys on such people.

[IR35FanClub]

WHS, you can't just pin the 4000% tag on when it people will never be charged this. Just because they are obliged by law to give the yearly APR doesn't mean it is ever applied as such.

Yes you can - as thats what the APR is for - its to compare the cost of loans.

I used to be a volunteer director of a credit union - we'd charge 11.9% APR no matter what size of loan. For some reason (lack of advertising budget due to not charging extortionate rates) we never manageed to attract anywhere as near as many people as we expected. Actually I know the real reason but could never convince the other directors - the words credit union are off putting - sounds very official and "expensive". If we'd have called it "CheapCash.com" instead of "BlahdiBlah Credit Union" we'd have helped thousands not hundreds. Still...

I'd love to see credit unions getting a much bigger share of the lending pot as most of the people who work for them don't just want to make money, they give up their time and energy to try and teach people how to save and budget so they don't need borrow in future.

[IR35FanClub]

It's only 4000% APR. For a £50 loan for 30 days, the amount paid back is 44% - £72. For 5 days, 8.25%.

If people haven't got access to ready cash, and need a short term loan as a one off, that they can easily repay a few days later, it works fine. The problems only arise when you can't pay the loan off, or you need a loan each month/week because you're so flaming crap at keeping control over your finances.

Isn't that what friends are for? I've got a few mates who are on normal salaries in dead end jobs. They know I earn a few bob and occasaionally ask for a loan of £100 or so. I've never had a default yet. And I don't charge interest. My loan terms are - "if you don't pay it pack you wont get another one". I think there's a lesson in there somewhere.

[Platypus]

Try living on the money you would get on benefits

This'd be a nice place to live if only I could afford it. But then, I'm not on benefits.

Somali family on benefits handed keys to £2million luxury 'council' home on one of London's most affluent streets | Mail Online

[northernladuk]

It's only 4000% APR. For a £50 loan for 30 days, the amount paid back is 44% - £72. For 5 days, 8.25%.

If people haven't got access to ready cash, and need a short term loan as a one off, that they can easily repay a few days later, it works fine. The problems only arise when you can't pay the loan off, or you need a loan each month/week because you're so flaming crap at keeping control over your finances.

WHS, you can't just pin the 4000% tag on when it people will never be charged this. Just because they are obliged by law to give the yearly APR doesn't mean it is ever applied as such.

[vetran]

It's only 4000% APR.. The problems only arise when you can't pay the loan off, or you need a loan each month/week because you're so flaming poor and they keep stopping your benefits/cutting your pay.

- FTFY


remember most people on this board rarely put their hand in their pocket and find its empty, most of us are in the top 10% earners even the permies. Try living on the money you would get on benefits or even the average wage without any savings you would have a different opinion. These payday loans are brutal exploitation of the poor in my opinion.

[NotAllThere]

It's only 4000% APR. For a £50 loan for 30 days, the amount paid back is 44% - £72. For 5 days, 8.25%.

If people haven't got access to ready cash, and need a short term loan as a one off, that they can easily repay a few days later, it works fine. The problems only arise when you can't pay the loan off, or you need a loan each month/week because you're so flaming crap at keeping control over your finances.