[Finance] Payday loans.

[maltaseagull]

I've just seen a TV advert for Lending stream payday loans.
I understand these are short term supposedly but they are approved by the FCA but 1271% Apr seems unreal.
Exploiting the needy seems the case.
Anyone been caught in this exploitation?

 

[South Stand Bonfire]

Wikipedia says this:

In 2018 following a lawsuit between a man from Chorley, Lancashire, England and the Financial conduct authority, new laws were introduced with new restrictions on payday loans in the UK.[11] These rules introduced three key points of regulation:

1. An interest rate cap of 0.8% per day – Lowering the cost for most borrowers. For all high-cost short-term credit loans, interest and fees must not exceed 0.8% per day of the amount borrowed.
2. Fixed default fees capped at £15 – Protecting borrowers struggling to repay. If borrowers do not repay their loans on time, default charges must not exceed £15. Interest on unpaid balances and default charges must not exceed the initial rate.
3. Total cost cap of 100% – Protects borrowers from escalating debts.Borrowers must never have to pay back more in fees and interest than the amount borrowed.

 

[sparkie]

Yes.

I lost countless thousands to the payday loan trap. Having to get new loans each month as the existing loans took all the money. And repeat. And repeat. At one point it was 14 loans each and every month.

It wasn't pretty but at least I got some of the cash back as eventually it became possible to make legal claim for unreasonable lending.

Absolute crooks.

 

[Doonhamer7]

wasn’t the bloke from Chorley the guy who formed the ‘Bank of Dave‘ - it was shown ‘Bank of Dave 2’ Film

 

[Randy McNob]

Yes.

I lost countless thousands to the payday loan trap. Having to get new loans each month as the existing loans took all the money. And repeat. And repeat. At one point it was 14 loans each and every month.

It wasn't pretty but at least I got some of the cash back as eventually it became possible to make legal claim for unreasonable lending.

Absolute crooks.

Not defending payday loan companies but I felt they were a little unfairly treated, I had some debt problems struggling to get to the end of the month but it was the credit cards that were worse. I did get a few payday loans and never had an issue, the ridiculous APR quoted was not reflective of the type of borrowing as it was short term bridging and annual interest rates were misleading. The costs were transparent and once repaid it was finished. Credit cards on the other hand allowed you to pay a minimum amount and keep putting off the overall amount owed which increased the debt mountain to unmanagable levels putting you in a debt trap. The amount you actually end up paying in interest and fees would usually far exceed what you'd pay for pay day loans

 

[Simster]

wasn’t the bloke from Chorley the guy who formed the ‘Bank of Dave‘ - it was shown ‘Bank of Dave 2’ Film

Yes, it was. He took on Wonga, now happily dissolved. Not sure why he's been sited as from Chorley. Everyone knows he's a Burnley man. Maybe he moved there?

 

[Simster]

Not defending payday loan companies but I felt they were a little unfairly treated, I had some debt problems struggling to get to the end of the month but it was the credit cards that were worse. I did get a few payday loans and never had an issue, the ridiculous APR quoted was not reflective of the type of borrowing as it was short term bridging and annual interest rates were misleading. The costs were transparent and once repaid it was finished. Credit cards on the other hand allowed you to pay a minimum amount and keep putting off the overall amount owed which increased the debt mountain to unmanagable levels putting you in a debt trap. The amount you actually end up paying in interest and fees would usually far exceed what you'd pay for pay day loans

How can credit cards be worse than those shite payday loan companies? You get all sorts of protection with credit cards and the rates,, whilst high, are hardly eye watering.

Pay day loan companies prey(ed) on the vulnerable. If you have a job and a good credit history, you're not paying 5000% interest. That only leaves the vulnerable left as customers. To be honest, there needs to be government subsidised schemes to catch those people I think.

 

[maffew]

Not defending payday loan companies but I felt they were a little unfairly treated, I had some debt problems struggling to get to the end of the month but it was the credit cards that were worse. I did get a few payday loans and never had an issue, the ridiculous APR quoted was not reflective of the type of borrowing as it was short term bridging and annual interest rates were misleading. The costs were transparent and once repaid it was finished. Credit cards on the other hand allowed you to pay a minimum amount and keep putting off the overall amount owed which increased the debt mountain to unmanagable levels putting you in a debt trap. The amount you actually end up paying in interest and fees would usually far exceed what you'd pay for pay day loans

Couldn't disagree more
Payday loans are sharks targeting people for a quick desperate fix, and their sales and marketing approach reflect this. They wouldnt even exist if people managed to use them as a short term bridge solution, their revenues come from people locked in, borrowing more paying peter with paul. How can their aprs be misleading? It's what they are. And they only state these because they are obliged to. Their lending criteria is far far less strict than cc company's, even the higher interest ones. Utter cretins, so are most of the sales people who work for them trying to hit their monthly targets

 

[Blue&WhiteSea]

Cancelled my Barclaycard when they reduced the minimum payment to 1%, there is only 1 reason they made that change and it was to trap more people in long term debt!

 

[Randy McNob]

Couldn't disagree more
Payday loans are sharks targeting people for a quick desperate fix, and their sales and marketing approach reflect this. They wouldnt even exist if people managed to use them as a short term bridge solution, their revenues come from people locked in, borrowing more paying peter with paul. How can their aprs be misleading? It's what they are. And they only state these because they are obliged to. Their lending criteria is far far less strict than cc company's, even the higher interest ones. Utter cretins, so are most of the sales people who work for them trying to hit their monthly targets

Because these type of loans are short term bridging i.e 7 days or up to a few weeks. The NOMINAL amount is more acurate calculation, in fact your mortgage would cost you more if you consider only the nominal amount. Only focusing on the APR is misleading, you have factor in the term.