Just flicked the telly above my monitor on. It's that time of day for us pensioners...you know...Countdown, a pot of tea and a Gypsy Cream.
Anyway I came in the middle of an advert for a money shop. A very attractive girl giving out the speil and 3 or 4 highly delighted ' customers ' clutching wads of £20 notes...advanced against their next paycheque or giro.
I wonder what the interest rates are on that little lot.
I suppose it's targeting desparate people who probably know no better.
I assume the service is not free, so, to me, this puts these firms in the category of ' Loansharks ', opening premises in the High Street to give an air of respectability !
Ted
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The APR varies between 1,300% and 2,400%
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Saw one of those ads the other week, 23.45% apr, bit steep I thought, hang on there's no decimal point!
Just like Brighthouse aimed at people who are either desperate or just can't wait and save up.
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>> The APR varies between 1,300% and 2,400%
Which is probably not bad, assuming that it is for a very short term loan, and that there is probably quite a bit of risk with bad debts.
I reckon it is 0.87% per day, so if you need £500 now, and get paid on Friday, that is 2.63% or £13 to borrow that money.
It would be a disasterous rate for a long term loan, but kind of makes sense for a few days (if you really need the money and have no other way to get hold of it).
I don't think that the loans are secured, so only getting £13 for giving somebody £500 unsecured is not risk free.
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20+ years ago a work colleague helped in a CAB debt management.
People came in with problems re electricity / rent /council tax etc
Often they would admit to 1 or 2 debts - mostly the admission was about 10-20% of their true debts. Help was needed from the most demanding debt - they ignored others who were not so pressing - that would be next month's problem.
Giving £500 loans for £13/week might sound a NEL (nice little earner) but bad debts will abound.
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>> Giving £500 loans for £13/week might sound a NEL (nice little earner) but bad debts
>> will abound.
Yes, exactly, especially these days with so many bad debts.
If somebody I didn't know wanted to borrow £500 until Friday, and they could prove their ID, but give me no security and probably have a terrible credit rating, I think I would want more than £13. Of course, these guys know their risk statistics and so can average it out over enough people to make a profit.
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The loan shark ads on the TV are about the only advert I've ever seriously considered complaining about. "Need a bit of cash until payday? Borrow this - APR is only 2365%."
Whole lot are [can we swear on C4P?] crooks. Don't think the ASA would do anything, though, presumably it must be acceptable to have got through the process in the first place. It should say, instead of an APR, "if you borrow £250 and keep it for a year, you'll owe us about £6000".
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To be fair, they do warn you the rates are high, and they do state its for "short term" only.
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I seem to remember Labour when in government some time ago promising to clamp down on at the door borrowing. One firm that would be affected is Provident Finance. When PF explained what would happen if they were not around, i.e. loan sharks would be the last resort for people, the government backed down.
This is no different in many respects to how our relatives may have pawned things before payday.
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No, when you pawn something you get a crap deal.
When you sign up to these crooks and miss a payment, they'll chase you to the ends of the earth for a debt you have no chance of servicing if you needed it in the first place.
Revolution. Wall. First. Etc.
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I have a friend who is a rep for Provident Finance, or better known in these parts as the "Provvy Woman".
She tells me in our local area, the most clients she has are in one of the local posh estates, where yummy mummies and 4x4s abound.
Fur coat and ........
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>> The loan shark ads on the TV are about the only advert I've ever seriously
>> considered complaining about. "Need a bit of cash until payday? Borrow this - APR is
>> only 2365%."
>>
>> Whole lot are [can we swear on C4P?] crooks. Don't think the ASA would do
>> anything, though, presumably it must be acceptable to have got through the process in the
>> first place. It should say, instead of an APR, "if you borrow £250 and keep
>> it for a year, you'll owe us about £6000".
Can't say I agree Alfa. The fact is that people with bad credit and nothing to secure a loan against want a short term loan.
Now, you could bring in a rule saying that you can't offer loans in that situation, but then you are possibly taking away a lifeline for people who need short term cash (and, yes, they probably should be better at managing their finances).
However, if you let companies lend to people in those situations, you need to let them lend at a rate where they can make a profit.
Take into account bad debts and other overheads for a lot of short term loans, and £13 to borrow £500 for two days is maybe not too bad.
If I sent you some ID, and asked you to wire me £500 for two days, how much would you want in return for taking that risk?
You are probably right that they should provide example of repayments, but I think that they have to give APR to fit with the advertising regulations.
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Want to buy some money ? - Zero
