MegaSack DRAW - This year's winner is user - rgwb
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I thought that short term loan companies couldn't charge more than 0.8% per day with a cap of 100% of the original loan amount.
What is going on with the companies that advertise on TV with 1000%+ pa interest rates.
TBH i have more respect for a mugger stealing my wallet than these parasitic scum.
Is i that the daily rate has to be multiplied up and communicated as an equivalent APR? the fact that the ultimate value is capped doesn't change that calculation?
(IANA Loan Shark, this is just a guess)
more respect for a mugger? at least you get choice with using (or not) these loan companies.
at least you get choice with using (or not) these loan companies.
Except that in a great many cases the people who actually need to use payday loan companies don't really have a choice 🙁
Calculated to APR, the lower “daily” rates make you think you’re not being charged much 😜 and most companies who work in this market target short term loans of small value yet make big money out of them... to people who aren’t always the best at maths decision making process.
There are laws yes, fairly rigid and all must comply.
"Except that in a great many cases the people who actually need to use payday loan companies don’t really have a choice "
I imagine it's more a case of payday loan users being too ****less to look for (can't obtain) a better loan rate or they just can't say no to stuff they want but don't NEED.
APR is kind of irrelevant for these kind of loads isn't it, in theory at least. The rates were once described to me as lending my mate £30 for a week and him giving it me back a week later and buying me a pint as thanks.
Like most things, they're useful if they are used properly but by very nature of the product, they're easily abused.
I imagine it’s more a case of payday loan users being too ****less to look for (can’t obtain) a better loan rate or they just can’t say no to stuff they want but don’t NEED.
Are you a tory MP?
1325% pa equates to daily rate of 0.731% or weekly of 5.227%
So using Lunge's example the mate buying you a pint for the loan of £30 for a week is 'paying' you more interest by quite a margin.
I imagine it’s more a case of payday loan users being too ****less to look for (can’t obtain) a better loan rate or they just can’t say no to stuff they want but don’t NEED.
Try and imagine another scenario then. Working zero hours contract on minimum wage, no hours for a couple weeks straight now and no other income. Rent is due, kids need fed, you have zero other credit as you are on zero hours contract and no steady income. You've went over your overdraft as your council tax direct debit came out, you have now been charged bank fees. As you have no money to pay this, a dailly fee is added. What started as being £10 short has now grown to £30. That's £30 you will never have spare and will need to carry over to next month. Hopefully you get some hours soon, maybe a couple of shifts extra to make up the shortfall. What's that? You've been let go, not enough work coming in? Shit. Better get onto social security. Wait how long do you need to wait before getting a paypment? Ok, go to the foodbank then, but foodbanks don't pay bills.
Some people are so ignorant of how others need to live I'd advocate ridding them of all assets and belongings and seeing how long they survive.
Payday loans prey on the most vulnerable but then along with pawn stores where you “sell” you stuff until payday they always have done. The fact they are have such a high profile now and haven’t been driven out of existence is sad.
Credit card companies are no less scrupulous. I have a friend who sent them the paperwork to stop the cards / interest etc as they are about to enter bankruptcy and they responded within 24 hours with a letter saying that they understand that they (my friend) are having financial difficulties so have added an extra 5000 to the credit limit.
Are you a tory MP?
they aren't that insightful.
I imagine it’s more a case of payday loan users being too ****less to look for (can’t obtain) a better loan rate or they just can’t say no to stuff they want but don’t NEED.
Are you a tory MP?
I'm going for a Daily Express editorial writer
Middleclastrackworld at its finest. Not even countenancing the idea that its not actually the entire countries population that have easy access to cheap available credit.
As with cheaper water/gas/electricity tariffs, new Audi's on PCP, Santa Cruz Nomads on 0% finance etc - which also aren't available to the poor/****less/ruthlessly exploited* - it costs a lot of ****ing money to be poor in this country.
They're basically preyed on, while the government views them with at best contempt, and more usually; scapegoats
* delete as applicable to your political view
* delete as applicable to your political view
all of the above?
not really meant to be a long term loan though is it, just that some people use it as
Try and imagine another scenario then. Working zero hours contract on minimum wage, no hours for a couple weeks straight now and no other income. Rent is due, kids need fed, you have zero other credit as you are on zero hours contract and no steady income. You’ve went over your overdraft as your council tax direct debit came out, you have now been charged bank fees. As you have no money to pay this, a dailly fee is added. What started as being £10 short has now grown to £30. That’s £30 you will never have spare and will need to carry over to next month. Hopefully you get some hours soon, maybe a couple of shifts extra to make up the shortfall. What’s that? You’ve been let go, not enough work coming in? Shit. Better get onto social security. Wait how long do you need to wait before getting a paypment? Ok, go to the foodbank then, but foodbanks don’t pay bills.
THIS^^^^^^^
Very much this.
Not a bad experience
I've had a few loans from Wonga over the last few years and have always found them pleasant to deal with. Some people may think it costs a fortune, but lets be honest - this is a payday loan, and isn't designed for value for money, its designed for convenience. Like many people who use short-term lenders, I soon found myself in an unhealthy cycle and created a very stressful situation for myself where I was literally paying out my entire wage packet to Wonga and reborrowing that amount.This was my stupidity but I am surprised that as a responsible lender they allow you to take on so many loans within that space of time.Regardless of this, I called them to advise of my difficulties and they immediately offered me a helpful plan that meant I repaid my full debt without any further interest and split over a few months to make things more manageable. Even though I'm not sure I would use them again, the customer service experience I had was very good.
Dan
A “good” review from the Wonga website. From most of the reviews it seems even the people who got in trouble went in with their eyes open. Or at least knew it was a bad/last chance option
perhaps because they have a nice website sponsored a football team etc people think they are a regulated business?
So how many pints do i get after a week if i lent you £30?
I imagine it’s more a case of payday loan users being too ****less to look for (can’t obtain) a better loan rate or they just can’t say no to stuff they want but don’t NEED.
Well, what a piece of work you are. If I were you I'd be very ,<span style="text-decoration: underline;">VERY</span> grateful that you have never found yourself in the situation that some find themselves. Have you not noticed the proliferation of food banks etc.? Sure some are ****less in getting themselves into the shit but the vast majority are not.
1286% APR is 0.8% a day, you can't just multiply it by 365. That is, believe it or not the new stricter cap, typically it was 4000% prior to 2015.
Is it 'good value'? it's really hard to say - you have to bare in mind there is a fixed cost to lending money to someone and it probably costs a Bank less in admin to lend a 'nice middle class person' £25k to "tidy up some credit cards" than it does for one of the payday Cos to lend someone £200 for 9 days as they, believe it or not, have more stringent checks.
So it might cost a Bank £14 in documentation, search fees, labour, bank costs etc to lend £25k which has to be covered within the profit of the lend, but makes a negligible difference to the total % cost to consumer.
It might cost PDL £16 to do the same, but if they're only lending £100 they need to be paid £114 back before they make a profit, you lend £100 and ask for £124 back in 15 days, you're APR is well into the thousands.
The APR isn't the most evil thing about PDLs, it was the way they were sold and re-sold. Really the market should be tiny, they're there for that day when the washing machine dies 2 weeks before payday in the same month Jnr needed braces, or whatever so you borrow £50 to get past this minor crisis and when you're paid you repay £65 and adjust your budget accordingly - if that sounds stupid because you're a responsible adult (who also earns £50k a year and has loads of spare each month to buy wood fired pizza ovens or whatever) then they're not for you and you are lucky enough to not know how a lot of young people and families are living at the moment.
First they allowed people to roll over the debt, "hey, don't worry about paying back the £124, just pay us £38 and do it next month" (£38 because now they're paying for the full month) and people would, over and over and over again, until the next crisis, which they were starting to call "too much month in your pay" like it an unfortunate, but unavoidable thing and loads of people got trapped. I know of people paying £150 a month to them just in interest to roll over the debt every month.
In the end, the Government got pissed off and hit them like the fist of an angry god - if you think the PPI punishment was harsh on the banks, it was a relative walk in the park to how the Government went after Wonga, Cash Genie and a few others.
Seems they think the spotlight is off them now though and new ones are creeping back into the market. For every 'good' customer their will be 2 or 3 who get in over their head and they'll make a fortune, and then the Government, via the regularity body will throw the book at them again.
I'm guess, but shirley would go something like this £1 at 1.08 daily
2 £1.08
3 £.1.16
4 £1.26
5 £1.36
6 £1.46
7 £1.58
8 £1.71
9 £1.85
10 £2
So takes you 10 days to get to 100% interest.
31 take ye to £10.06 and 1000% interest per month?
As I say dunno guessing. Do they charge interest on the interest?
That’s £30 you will never have spare and will need to carry over to next month.
Next month? It literally might never happen!
P-Jay has it dead right, it's the first step on a spiral of debt that will just keep on getting worse.
Anyone who thinks it's a good idea, however desparate their circumstances, should never have control of their own finances. It's self descructive.
I’m guess, but shirley would go something like this £1 at 1.08 daily
2 £1.08
3 £.1.16
4 £1.26
5 £1.36
6 £1.46
7 £1.58
8 £1.71
9 £1.85
10 £2
So takes you 10 days to get to 100% interest.
31 take ye to £10.06 and 1000% interest per month?
As I say dunno guessing. Do they charge interest on the interest?
that’s 8% not 0.8%
I’m guess, but shirley would go something like this £1 at 1.08 daily
1.08 is 8%, not 0.8%.
The poorest people in society are often not those who are out of work, they are the minimum wage, zero hours worker. For these people, pay day loans may be seen as a lifeline, but if not used well they contribute to ever spiraling debt with no obvious way out.
This is compelling, sobering and powerful, a must read for anyone and everyone.
"
I’m going for a Daily Express editorial writer
Middleclastrackworld at its finest."
Criticises summary comment by way of a summary comment.
The hypocrisy levels are high in you.
I imagine it’s more a case of payday loan users being too ****less to look for (can’t obtain) a better loan rate or they just can’t say no to stuff they want but don’t NEED.
You're either trolling really badly (although folk have bitten 😀 ) or are genuinely unaware of the circumstances that their customers find themselves in that turn to these companies, instead (and understandably) relying on a poisonous media-fed opinion. I don't know you, so I don't know what drives what you think.
Describe the kind of person that you think uses a 1000% APR loan company? I'm not looking to scrap.
BTW, no snow in W.Yorks.
I’m going for a Daily Express editorial writer
Ouch, that's a serious insult
Our local food banks run dry during the school holidays.
Maybe don't piss around at skool and end up in a shit job then breed kids you can't afford to feed? Always some one else's fault though isn't it.
Rene59. Great post. Many on here don't have a clue how fortunate they are, arguably myself included. I've been in plenty of dark days of debt, less now but would make some on here see me very different if wecthrew numbers around.
It's easier than some think to find yourself in deep.
not really meant to be a long term loan though is it, just that some people use it as
Because once in debt and subject to punitive levels of interest it can be very difficult to get out of debt. I despise these companies and the law that allows them to exist.
Those robbing ****ers shouldn't be allowed to advertise on tv. Says a lot about the morals of ITV & Co.
Ah, daytime telly. Crap to fill the air waves, loan adverts for the desperate and charity give all your money away adverts for the nearly dead.
I’m guess, but shirley would go something like this £1 at 1.08 daily
1.08 is 8%, not 0.8%.
D'oh!!
OK concept stands though, at 1.008
1 quid becomes 18 quid after a year!
You have just discovered the concept of compound interest. Were you not taught this at school?
On the surface pay day loans are a very useful service for some folk. Back to the £30 loan paid back with a pint a week later - That feels ok and is a much higher effective interest rate. Not something to be done every week but if it gets you out of the peril of even bigger fines etc it feels like a service that is good to have available. I guess the issue is when they are given to folk with only marginal chance of paying it back and how it’s allowed to snowball. I wonder what the percentage of bad transactions is to good.
Try and imagine another scenario then. Working zero hours contract on minimum wage, no hours for a couple weeks straight now and no other income. Rent is due, kids need fed, you have zero other credit as you are on zero hours contract and no steady income. You’ve went over your overdraft as your council tax direct debit came out, you have now been charged bank fees. As you have no money to pay this, a dailly fee is added. What started as being £10 short has now grown to £30. That’s £30 you will never have spare and will need to carry over to next month. Hopefully you get some hours soon, maybe a couple of shifts extra to make up the shortfall. What’s that? You’ve been let go, not enough work coming in? Shit. Better get onto social security. Wait how long do you need to wait before getting a paypment? Ok, go to the foodbank then, but foodbanks don’t pay bills.
Some people are so ignorant of how others need to live I’d advocate ridding them of all assets and belongings and seeing how long they survive
I didn't have time to come back to this thread yesterday but this perfectly sums it up - how anyone can think *many* of the people caught up in such debt spirals have done so through choice I don't know.
Maybe don’t piss around at skool and end up in a shit job then breed kids you can’t afford to feed? Always some one else’s fault though isn’t it.
I am glad no-one has risen to this, feeding the hate you hold inside.
Payday loans need to be forced to require a security, maybe against your actual pay. i.e. you don't have enough right now to pay that emergency thing, but you will when you get paid at the end of the month. So the loan should be secured against the pay to ensure you can pay it back and will pay it back.
The problem is a lot don't have the money to pay it back.
If it's something costing more than the month's salary is going to cover, then should be refused. Go speak to the bank to get a proper loan or credit card for a longer term loan.
No payday loan company wants that though. They make the money from the people who struggle to pay it off, and from debt collectors if they can't.
Many people also use these loans for things because it's there. If it wasn't there they might think twice. e.g. little brat's birthday coming up and they want to buy it an expensive present, don't have the money so get a payday loan. Instead, just get a cheap present.
Go speak to the bank to get a proper loan or credit card for a longer term loan.
But the people that use Payday loans generally can't get 'proper' loans or credit cards - that's the problem and that's what these parasitic companies feed on.
Payday loans need to be forced to require a security, maybe against your actual pay. i.e. you don’t have enough right now to pay that emergency thing, but you will when you get paid at the end of the month. So the loan should be secured against the pay to ensure you can pay it back and will pay it back.
this is basically a credit card from a highstreet bank. An option not available to the people we are talking about.
However, what is the alternative? Doorstep leg breaking loanshark? Starve? Debtors Jail? The poorest have always struggled, but now they advertise on the football, and have an app, so those of us lucky enough to not be in that world now know about it.
OK concept stands though, at 1.008
1 quid becomes 18 quid after a year!
Except that under regulation from the FCA the interest and fees are capped at 100% of the loan amount. Borrow £1, never pay more than £2 back, ever. There's also no compounding, it's just 0.8p per day per pound borrowed. So even unchecked it would be £3.91 after a year. APR is the cost of borrowing normalised over a year, so it just doesn't work with something for a month, hence big numbers. But no one really understands APR anyway, hence this thread title 🙂
perhaps because they have a nice website sponsored a football team etc people think they are a regulated business?
Payday lenders are the most heavily regulated part of the financial spectrum, by a very long way. You think they're unscrupulous, it's nothing compared to rent-to-buy companies who really are pretty deplorable. Fees are capped, interest is capped, affordability checks are stringent. It desperately needed regulation, there was a lot of unpleasant and exploitative behaviour by all the big companies, but it's far better now, because it has to be.
They'll never be perfect (much like every company ever), but they're providing a very well regulated option for people with no other options. There's a glorious irony about middle class people telling each other how evil they are.
Go speak to the bank to get a proper loan or credit card for a longer term loan.
But the people that use Payday loans generally can’t get ‘proper’ loans or credit cards – that’s the problem and that’s what these parasitic companies feed on.
That might be partly true, really 'nice middle class people' have over-drafts for this sort of thing, or credit cards, but by and large humans don't handle these well, and the banks know that. If you have an OD, ever wondered by your banking app shows 'amount available' rather than making you work it out yourself, they want you to be in the habit of using it each and every month because it's great business from them - you borrow £200 or whatever and never, ever pay it back, just the interest. When my Wife and I first had a joint account we had a £200 OD which we went into most months, £5k in cash going in, OD by £190 or whatever for a few days and we'd pay them £3 a month interest and they paid us zilch (I know free accounts ain't free).
Anyway, back on point - you don't want a Bank Loan for £50, or even £500, they're not really interested in less than a grand, although ironically you can probably borrow a grand cheaper than £200 from a PDL, and despite all the smiling faces on the application form, like most people you'll smile for a few days after you get into it whilst all this money takes away your stress, and then cry for the next 3 years whilst it chips away at your disposable income and long after whatever you spent it on has gone away.
By and large, Humans are at a great disadvantage to Banks when it comes to credit - I don't think we're genetically designed to think about years from now because the mushy bits between our ears were designed to keep you alive until the next meal.
Really, unexpected expenses - should be over-draft or credit card, bigger, longer term needs should be personal loan, PCP or HP and home buying, mortgage, but the Banks like the muddy the water to push long-term lending into short terms facilities as that's where the interest is.
You shouldn't be paying for something over 3 years on a credit card, the average credit card rate in the UK is 23%, but conventional wisdom (and MSE who I have my own issues with) say, well - "pay them at their own game" and switch for 0% deals, which sounds great on paper, but it fails miserably when you add a bit of basic psychology into the mix - for every person who buys a Capra on a 0% deal and religiously pays it off over 24 months paying not a penny in interest, there's a dozen 'mugs' who pay the minimum and worse spend more. To millions of people in the UK that £100 a month they pay to Barclaycard or whoever has just become another bill like Council Tax, they can't remember what they spent the money on in the first place, but they just keep paying it, and likely don't look at the bills because who wants to be that miserable yeah?
When people ask me about borrowing (I used to work in a bank for a long time) I always say get a personal loan for stuff in the few thousands (like a bike, home improvement or whatever) but they'll always argue a Credit Card is cheaper, and in theory it is - ask yourself, if it's so much cheaper, why has credit card debt and the profits they make from them exploded since the invention of the 0% deal?
So yeah, PDL are wrong for 80% of the people who buy them, but then the 'nice middle class people' equivalent versions of ODs and CCs are wrong for 80% of the people who buy them too.
I’d say PDLs are the only option for 99% of people who use them. Not the wrong option.
Maybe don’t piss around at skool and end up in a shit job then breed kids you can’t afford to feed? Always some one else’s fault though isn’t it.
However, once you do decide to sort life out, everyone has written you off for jobs, credit and more. So you end up with no choice but payday loan parasites.... Until you have been there, it is hard to comprehend how easy it is to loose it all, have debt spiralling just to keep fed and a roof over you head, and that you will need decades of slavery to the debt.
I have come close - a property business that nearly bankrupted me in 2008, nearly lost us the house and more. The debt at one point would have lost me everything, with still debt owing. Thankfully I scraped out, but effectively 'started again' finacially with our move to Scotland. As a couple with young family of three, who had been earning and saving together for 15 years, we had nothing apart from possessions. Thankfully I pulled the plug on things a week or two before it got really ugly - but 10 years later we are still living on the months salary with no savings, but at least we are back on property ladder.
I cannot imagine what it is like to have no way out, no hope, no money, facing loosing a roof, clothes and food, and then some company says 'here, borrow some more...'
The bankable will buy them all up bs on as another revenue stream... You watch
Maybe don’t piss around at skool and end up in a shit job then breed kids you can’t afford to feed? Always some one else’s fault though isn’t it.
... are you being sarcastic?
Well it is kind of sad but true that the education choices made at age 14 maybe 13 and how hard you work will determine A levels, degree and job for many people.
Maybe don’t piss around at skool
Indeed.
Education is important, but scoring points on the internet is importanter.
The big Banks won’t touch PDL companies purely due to Risk. Banks are Risk averse these days and buying a PDL company to pop on your Balance Sheet isn’t best practice. 15 years ago maybe, but not since 08’.
Banks are still selling Bad Debt books off to both collection agencies, and other high interest Financial firms who make £’s in charges and high interest loans/credit.
There are some robust TCF laws in this country now to stop organisations focusing on the needy (and the not so needy) and rightly too. Hence Neej20’s point about how regulated these PDL companies are (and high st Banks)
I know of one person who setup a PDL who came from Credit Services, he thought “I can make money out of this” and setup a company with a loan from a high st Bank... and then gained investments on the back of it. It’s a damn efficient organisation with huge IT back end and little manpower processing, it’s a fantastic model and it’s turning over a small perfectly formed profit.
Debt does pay, just not to the people who require it.