Quick Loan Anyone
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They actually can make sense. Going overdrawn for just a day by a small amount can rack up loads of penalty and interest charges which if worked out as an APR can equate to over 1,000,000%. If you just need a small amount to tide you over and know that you can repay it within a week or two, then they only make a small amount, maybe £70 inc admin charges on a £500 loan. Going £1 overdrawn might attract a £40 penalty, £40 letter to tell you of the penalty, daily interest and other advantageous attempts to milk the customer dry by the banks.
The vulnerable and the stupid Lesley. To be fair these loans are what you call the pay day loans, so you only borrow for a week. You borrow eighty pounds and pay back a hundred. However I would seriously question someone who can't budget a week in advance.
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I totally agree with your budget comment. I get the money in, budget for the month until the next pay day. Whatever is left is fun money
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They actually can make sense. Going overdrawn for just a day by a small amount can rack up loads of penalty and interest charges which if worked out as an APR can equate to over 1,000,000%. If you just need a small amount to tide you over and know that you can repay it within a week or two, then they only make a small amount, maybe £70 inc admin charges on a £500 loan. Going £1 overdrawn might attract a £40 penalty, £40 letter to tell you of the penalty, daily interest and other advantageous attempts to milk the customer dry by the banks.
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I have loads of transactions and no overdraft facility, but I try to keep the current account with the minumum balance possible as it gets bugger all interest. I have all the DD's come out on the same day, and always make sure that the money is there a week in advance to clear them. Last August I was off on hols, but deposited all the cash necessary 4 days before anything was due (and there is always a working balance... just in case) - About a week later, my mobile stops working. I call them to find out they have disconnected me due to non payment. Next morning I get a statement of default charges from the bank, and letters from mortgage company, car loan company, electricity and landline company telling me the DD's have been refused. Turns out the bank in question debits your account at 23.59, but doesn't apply credit until 00.01. One of the DD's had changed that month, so I was 14 pence overdrawn for 2 minutes. Adding up charges from the various companies that hadn't been paid, default charges from the bank, and 'returned item' charges from the bank (along with the 56p per transaction for the entire quarter) the cost was near enough 300 quid. I don't have a computer powerful enough to calculate the APR, but I thought the FO could make this a quick win for me. I complained to the bank and was told to read the small print. Took it to the FO and was told that they did exactly what they said they would do in page 76 of their T's and C's, so they had no case to answer. So I had to resort to the good old fashioned method of standing at the end of the queue in the bank screaming at the manager to explain why he he had charged me more than a billion % APR on a 14p overdraft for 2 minutes. Eventually he gave in and waived the charges, and refunded the charges from the other companies........Two lessons here -1.fight your corner when you know you are right2. The FO is toothless. If someone is taking the **** and keeping it secret, the FO can help you. If someone is taling the **** but has included it, no matter how ridiculous in the samll print, the FO can do nothing.
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I am with Lesley on this.
Of course there are people in dire problems with money and who are risking immense overdraft charges etc.
I don't think this justifies the actions of these greedy moneylenders who are preying on people in order to make immense profits on their backs. This is the bad face of capitalism and I feel that there should be some form of regulation in such matters. I would include the banks excessive charges as well.
I am in no way a socialist but I only want to see what is fair. They could lend in the short term charging an acceptable interest and still make a perfectly good profit. There used to be a system called RPM or retail price maintainance. Dealers were restricted to a profit margin which gave them plenty of profit but was fairer on the buying public, and people always knew where they were with prices in general. When this was done away with they said it would give sellers plenty of leeway to reduce prices etc., in fact it has now gone the other way. Too many greedy get rich quick merchants.
This gross profiteering on payday loans is way over the top without question and should be controlled.
Les
Of course there are people in dire problems with money and who are risking immense overdraft charges etc.
I don't think this justifies the actions of these greedy moneylenders who are preying on people in order to make immense profits on their backs. This is the bad face of capitalism and I feel that there should be some form of regulation in such matters. I would include the banks excessive charges as well.
I am in no way a socialist but I only want to see what is fair. They could lend in the short term charging an acceptable interest and still make a perfectly good profit. There used to be a system called RPM or retail price maintainance. Dealers were restricted to a profit margin which gave them plenty of profit but was fairer on the buying public, and people always knew where they were with prices in general. When this was done away with they said it would give sellers plenty of leeway to reduce prices etc., in fact it has now gone the other way. Too many greedy get rich quick merchants.
This gross profiteering on payday loans is way over the top without question and should be controlled.
Les
I have loads of transactions and no overdraft facility, but I try to keep the current account with the minumum balance possible as it gets bugger all interest. I have all the DD's come out on the same day, and always make sure that the money is there a week in advance to clear them. Last August I was off on hols, but deposited all the cash necessary 4 days before anything was due (and there is always a working balance... just in case) - About a week later, my mobile stops working. I call them to find out they have disconnected me due to non payment. Next morning I get a statement of default charges from the bank, and letters from mortgage company, car loan company, electricity and landline company telling me the DD's have been refused. Turns out the bank in question debits your account at 23.59, but doesn't apply credit until 00.01. One of the DD's had changed that month, so I was 14 pence overdrawn for 2 minutes. Adding up charges from the various companies that hadn't been paid, default charges from the bank, and 'returned item' charges from the bank (along with the 56p per transaction for the entire quarter) the cost was near enough 300 quid. I don't have a computer powerful enough to calculate the APR, but I thought the FO could make this a quick win for me. I complained to the bank and was told to read the small print. Took it to the FO and was told that they did exactly what they said they would do in page 76 of their T's and C's, so they had no case to answer. So I had to resort to the good old fashioned method of standing at the end of the queue in the bank screaming at the manager to explain why he he had charged me more than a billion % APR on a 14p overdraft for 2 minutes. Eventually he gave in and waived the charges, and refunded the charges from the other companies........Two lessons here -1.fight your corner when you know you are right2. The FO is toothless. If someone is taking the **** and keeping it secret, the FO can help you. If someone is taling the **** but has included it, no matter how ridiculous in the samll print, the FO can do nothing.
I have had more bank charges than you can shake a stick at(Halifax customer
). Nearly every one has been waived after 5 mins on the phone. 
Last edited by jonny_693; Aug 15, 2010 at 11:49 AM.
I had to get a payday loan once, it was for 2 weeks at £200, repayment £250. I didnt read the small print, and interest etc, what a C*NT i felt. I only needed the extra cash due to a financial emergency.
Never again. They are a rip off prey on the needy, and its bang out of order.
Never again. They are a rip off prey on the needy, and its bang out of order.
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Ok, Devil's Advocate time - just to stimulate discussion....
Suppose you want to run a legitimate company offering small, short-term loans to people who genuinely just need a few quid to tide them over until pay day. You still have the same fixed overheads per customer as you would if you were dealing with much larger sums - time taken on the phone, checking identities, completing and checking forms, issuing cheques and chasing overdue payments.
These things all take just as long if you're lending £500 as they would for £5000, and you also have to factor in that, almost by definition, you'll be dealing with people who have a poor credit history, ie. are more likely than usual not to pay you back at all.
What that means is that, as a percentage, the "interest" rate - and I put the term in quotes because much of it is really a fixed fee for arranging the loan - looks very high. But, look at it like this: suppose you want to lend £500 for 2 weeks at, say, 10% pa - still somewhat higher than a 'normal' loan rate - the total interest payable is just £1.92.
Could you arrange a loan for a total fee of £1.92?
How about £19.20? (ie. 100% interest rate, already high enough to get the Daily Mail readers writing in)
I doubt it... and personally I'd write off the business model at that point and go and do something else instead. But I'm also struggling to see how such a business would work without charging interest rates that cause an outbreak of "something-must-be-done"-ism.
Suppose you want to run a legitimate company offering small, short-term loans to people who genuinely just need a few quid to tide them over until pay day. You still have the same fixed overheads per customer as you would if you were dealing with much larger sums - time taken on the phone, checking identities, completing and checking forms, issuing cheques and chasing overdue payments.
These things all take just as long if you're lending £500 as they would for £5000, and you also have to factor in that, almost by definition, you'll be dealing with people who have a poor credit history, ie. are more likely than usual not to pay you back at all.
What that means is that, as a percentage, the "interest" rate - and I put the term in quotes because much of it is really a fixed fee for arranging the loan - looks very high. But, look at it like this: suppose you want to lend £500 for 2 weeks at, say, 10% pa - still somewhat higher than a 'normal' loan rate - the total interest payable is just £1.92.
Could you arrange a loan for a total fee of £1.92?
How about £19.20? (ie. 100% interest rate, already high enough to get the Daily Mail readers writing in)
I doubt it... and personally I'd write off the business model at that point and go and do something else instead. But I'm also struggling to see how such a business would work without charging interest rates that cause an outbreak of "something-must-be-done"-ism.
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