MegaSack DRAW - This year's winner is user - rgwb
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I though loan sharking was banned?
Just had an ad on the telly for peachy co uk.
unbelievable...
that's nothing, I've seen over 2000% on those ads
It's because they have to show an APR and for short term stuff (like PayDay loans) it's basically meaningless.
I'm not saying that PayDay loans are faultless mind you, but they serve a legal purpose that illegal finger-breaking (or worse) loan sharks used to...
APRs really are an irrelevance in the context of a payday loan.
10% compounded monthly is the equivalent of 200% APR.
Would you say paying 10% of an advance for an instant injection of cash in an emergency for a month is a lot?
APRs really are an irrelevance in the context of a payday loan.
Why is this the case?
(By the way I know nothing about payday loans...)
EDIT: Already answered by Stoner above.
You can get 20% off if you take the loan out today! 🙂
Would you say paying 10% of an advance for an instant injection of cash in an emergency for a month is a lot?
Work the same in Monopoly so it must be okay
If I lend you £10 until Friday and want £11 back it would be an APR of about 916%. So pretty irrelevent.
edd - because you pay them back in a timescale measured in days, not years.
Well, it is relevant for lots of people in the real world. The reality is that lots and lots of people roll their loans over, i.e. borrowing more and more to cover each loan (just like the sharks used "let" you do in the bad old days).
If you think the target customers for these shysters just take a loan, pay it back a week or two later and they're done with it, then you're being naive.
and 20% monthly is 900% BTW.
10% fortnightly is about 1000%
My mrs works in finance.
One their brokers, in a car dealership, tried to put through a finance deal, with 3600% apr.
The were told no, and if they did it again, they'd be reported.
Why are they 'shysters'?
Nobody forces people to take out these loans, people have a choice.
If you think that everybody taking them out is using the money as a last option to pay for their grannies operation then you're the naive one. They're more likely than not used by the 'want it now' generation to get whatever latest disposable tech is available or a holiday they 'deserve'. They are also far less likely to pay it back, hence the high returns charged to cover the far higher risk to the lender.
Not sure I made any comment whatsoever about the reasons why people took the initial loans out, did I?
Nope, just checked, seems that I didn't.
On reflection, and not wishing to do that ninja-edit thing after someone has commented, I'd apologise for the word "shyster" - anti-semitic connotations very much not intended.
b r - Member
If I lend you £10 until Friday and want £11 back it would be an APR of about 916%. So pretty irrelevent.
Can you lend me a tenner?
1058%? [url= http://www.wonga.com/money/is-this-apr-expensive/ ]scroll down to see why this is bargaintastic[/url]
I don't think many people argue that pay day loans have no place - they're better than illegal loan sharking.
However, the real issue is that recently these payday lenders have been marketing themselves in a "no hassle, no worries, we're you're best mate". This is encouraging people to take out these loans for less than essential purposes, high risk of debt spiral.
Borrowing £200 to fix your car in an emergency so you can get to work, that makes sense
Borrowing £200 to buy the kid a tablet computer fr xmas, not good.
The worst one I've seen is one where the terms are for up to a year (with much larger credit limits than wonga and the like) and it's still 278% interest 😯
As said before, as an emergency thing, they aren't so bad. Infact they are probably cheaper than having to pay late payment fees to phone companies/unauthorised overdraft fees, if it's only a couple of days. It's when its used for non emergengies that problems start.
the aprs may be misleading but its the type of borrowing that keeps people trapped in a debt cycle
anyone who thinks otherwise is deluding themselves
id have no problem legislating against this
somehow i dont think thatll be happening
[url= http://www.telegraph.co.uk/news/politics/david-cameron/9642807/David-Camerons-senior-adviser-leaves-to-lobby-for-Wonga.html ]http://www.telegraph.co.uk/news/politics/david-cameron/9642807/David-Camerons-senior-adviser-leaves-to-lobby-for-Wonga.html[/url]
id have no problem legislating against this
legislating against what exactly?
heres some good reccomendations
That the Office of Fair Trading review the affordability assessment requirements of lenders contained in its Irresponsible Lending Guidance, and consult on a proposal to establish a total borrowing limit based on a set ratio of the borrower’s income. In order to ensure that the borrowing limit is enforceable, all high cost lenders should be required to register their loans on a national database;
That Government increase the criminal penalties for unlicensed lending to at least 5 years imprisonment and substantially increase the maximum fine that can be imposed for this offence;
That the Department for Business, Innovation and Skills commit to introducing a cap on the total cost of consumer credit agreements, and establish an independent commission to advise it on the structure and level of this cap and, on an ongoing basis, to monitor its impact;
That the Department for Business, Innovation and Skills commission further research to examine the potential links between legal money lending growth, over-indebtedness and illegal lending
Ever calculated the APR for being charged for going into your overdraft by a £1?
Equally eye watering