Loan sharks on TV ?

[ventoux50]

Just pottering about round the house with the TV on in the background, when the ads came on (During Top Gear on Dave)

The ad was for a quick 'cheap' loan . . . . . . I found myself watching it for a moment and out of interest looked at the small print at the bottom of the screen . . . . . . .



Typical APR is 2689 %

not 26 . 89 %

really it is 2,689 %



TWO THOUSAND SIX HUNDRED AND EIGHTY NINE PER CENT !


I could not believe my eyes !

Is this legal, are people really allowed to fleece others who MUST be totally desperate to even contemplate using them ?

I checked out the website and it gives an example of a short term loan:

borrow £265.00 for just 16 days = total to pay back £313.19 . . . . £48.19 in fees and interest !!!

I feel so desperately sad for people who are lured into scams like this, the poorest of our society are obviously the target audience, and at Christmas as well !

A pox on this company and others like them !

B****rds !

 

[martint235]

There is usually a caveat in the ad that says something like "Short term loans should not be used as a long term financial solution". My understanding is that it's entirely legal as they are very up front about the interest charges.

 

[Dan B]

Try calculating the equivalent APR on an unauthorised overdraft (taking the charges and fees into consideration) and you'd probably see equally ludicrous numbers.

 

[Lurpak]

You were watching/listening to Top Gear. Isn't their favourite car the Bugatti Veyron which costs over £1 million? For a car.

 

[marinyork]

There is usually a caveat in the ad that says something like "Short term loans should not be used as a long term financial solution". My understanding is that it's entirely legal as they are very up front about the interest charges.

I think that is an exceptionally generous interpretation that doesn't have much insight into the matter. The legislation we have in this country is hopelessly out of date on the matter. It's very sad we're reduced to Private Members' Bills to sort this out as government after government has declined the opportunity to sort one of the biggest blights on the lives of people in this country.

 

[martint235]

I think that is an exceptionally generous interpretation that doesn't have much insight into the matter. The legislation we have in this country is hopelessly out of date on the matter. It's very sad we're reduced to Private Members' Bills to sort this out as government after government has declined the opportunity to sort one of the biggest blights on the lives of people in this country.

So is it illegal then?

At the end of the day people don't have to borrow the money and if they do borrow they know how much it will cost them to pay it back.

 

[ventoux50]

So is it illegal then?

At the end of the day people don't have to borrow the money and if they do borrow they know how much it will cost them to pay it back.

Yes of course they know, but that doesn't make it acceptable.
Many people are at rock bottom at the moment and it will only get worse for so many more as the cutbacks/ job losses etc begin to bite hard....... loan companies like these are already potentially adding to the misery by enticing people (many of whom might not be realistic in their intention / means to pay back) to take on more debt at the very time they should be avoiding it.

Some vulnerable people in our society need to be protected from companies such as this, and of course from themselves.

 

[upsidedown]

I think the problem is not the interest if you pay it back on time, it's what happens if you miss the payment. I bet the interest goes mad then and would very quickly snowball.

 

[marinyork]

So is it illegal then?

At the end of the day people don't have to borrow the money and if they do borrow they know how much it will cost them to pay it back.

I highlighted the bit I did for a reason.

I'm afraid I'm not convinced by the cleverness of your platitudes. It is not the case that everybody knows at all how much it will cost them to pay back. We live in a society that is highly 'innumerate' yet at the same time people have very easy access to credit, although not always on reasonable terms. We also live in a society based heavily on instant gratification that lends itself very well to preying on vurnerable people. If you talk to people with large debts you will very quickly find that some have very little understanding at all of how much they are paying back in interest even if they know the numbers. There are other people simply in denial or procrastinate on the matter and do have some level of understanding. How up front the information is varies enormously on a number of different presentations. The issue has been discussed in depth for many years. Newsnight used to feature programmes on credit and debt on an estate near here. It is not surprising that they did, you can easily spot loan sharks or people delivering leaflets for financial services for those unable to get more mainstream ones. As for 'need' it's a huge debate, but what I would say is that plenty of middle class people do just as silly financial things as those who are poor but quite often get penalised less heavily for it and castigated less.

 

[martint235]

Is there no such thing as personal responsibility anymore? The ads do not attempt to hide in anyway what the cost of the loan will be, they even offer advice on what the facility should and shouldn't be used for. If a person sees the ad and decides to take out a loan, they have chosen to do so. There are lower interest finance options for people with less disposable income or poor credit (eg credit unions).

To me, the whole concept that the ad is selling is suspect: I can't afford to get through this month so I'll borrow some money so I won't be able to afford to get through next month either......

 

[Dan B]

To me, the whole concept that the ad is selling is suspect: I can't afford to get through this month so I'll borrow some money so I won't be able to afford to get through next month either......

I think you're right about that. What does this tell us about the people offering the loans? Perhaps as well as questioning whether personal responsibility exists any more, we should also ask about social responsibility

 

[martint235]

I think you're right about that. What does this tell us about the people offering the loans? Perhaps as well as questioning whether personal responsibility exists any more, we should also ask about social responsibility

I kind of agree but as Marin said, we live in a time of instant gratification. I don't feel able to blame a company for making money from people's lack of prudence. They are after all employing people etc

 

[Lizban]

I find the APR figure is misleading.

It's bit like staying in a £100 a night hotel and the rate being quoted as £36, 500 a year!

Or I lend you £20 on Monday you buy me a £3 pint on Friday that 1368% APR

 

[Paulus]

I don't have much sympathy with those who take out these loans at the these huge intrest rates, if you can't afford it, don't buy it. They should be able to work out how much they are going yo have to repay. But, I do think the companies should publish a table showing how much a loan will cost week by week to give a comprehensive guide to the final cost.

 

[Dan B]

I kind of agree but as Marin said, we live in a time of instant gratification. I don't feel able to blame a company for making money from people's lack of prudence.

I guess we will have to differ on that point then, because I do. It targets people who have financial problems, and has the general effect of making their problems worse a month later - would you condone an off-licence that marketed primarily at alcoholics?