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  • FIRST POST
    • JeremyC1971
    • By JeremyC1971 11th Oct 16, 9:49 AM
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    JeremyC1971
    Amigo Loans Extortionate rates
    • #1
    • 11th Oct 16, 9:49 AM
    Amigo Loans Extortionate rates 11th Oct 16 at 9:49 AM
    I was recently asked to be a guarantor on a friend's loan for £5k. He is a very old friend, liquid, he and his wife both work, they have equity in their house etc. Unfortunately, he lost his business 3 years ago and is spending 7 years paying off the debt he'd racked up which has affected his rating.

    I agreed to be guarantor and preceded to fill out the form. However, on further investigation I realised that the loan (£5k remember) which was repayable of 60 months at £197 per month, was going to add up to interest of £6857 (that's the interest only).

    I did a comparison with Nationwide and if I paid the same repayments the loan would be cleared in 27 months and the total interest would be £261.

    So in other words, Amigo loans are charging 26 times the high street rate despite having the added security of a credit worth guarantor.

    Does anybody know whether this is worth flagging with the ombudsmen? I am appalled at how unscrupulous these companies are being in taking advantage of the disadvantaged, people who are just trying to get back on track. With rates like that, it's no wonder people can never get off the bottom rung.

    Thank you for reading.
Page 1
    • zx81
    • By zx81 11th Oct 16, 9:51 AM
    • 9,333 Posts
    • 9,159 Thanks
    zx81
    • #2
    • 11th Oct 16, 9:51 AM
    • #2
    • 11th Oct 16, 9:51 AM
    No, not worth going to the Ombudsman. They can charge the rates they want and the customer can accept or not.

    Agree it's a cunning business model to effectively charge sub prime rates to prime guarantors, but customers seem to like it for some reason.
    • MallyGirl
    • By MallyGirl 11th Oct 16, 10:02 AM
    • 1,551 Posts
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    MallyGirl
    • #3
    • 11th Oct 16, 10:02 AM
    • #3
    • 11th Oct 16, 10:02 AM
    and don't forget that if he doesn't keep up with repayments it will be you who gets hit with that interest rate as his guarantor.
    Can you not loan him the money yourself?
    • Oakdene
    • By Oakdene 11th Oct 16, 10:04 AM
    • 500 Posts
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    Oakdene
    • #4
    • 11th Oct 16, 10:04 AM
    • #4
    • 11th Oct 16, 10:04 AM
    If you can get the loan from Nationwide, take it out & pay the Amigo loan off & get your friend to pay you the monthly repayments
    • tidds
    • By tidds 11th Oct 16, 10:06 AM
    • 121 Posts
    • 59 Thanks
    tidds
    • #5
    • 11th Oct 16, 10:06 AM
    • #5
    • 11th Oct 16, 10:06 AM
    Agree with MallyGirl - best thing to do is take the loan out yourself if you don't have the liquid cash. It's effectively you taking out the loan anyway, but this way if any issues the interest paid is less - plus, his monthly amount to you would be less also, making less chance of an issue.
    • MrsTinks
    • By MrsTinks 11th Oct 16, 10:26 AM
    • 14,561 Posts
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    MrsTinks
    • #6
    • 11th Oct 16, 10:26 AM
    • #6
    • 11th Oct 16, 10:26 AM
    DO! NOT! DO! IT!

    Don't guarantor any loan ever. You have no control over the loan, you are tied in for the duration too and the full amount could be retrieved from you.

    You would be better off helping your friend with his budget and looking at better products.

    The Amigo loan and similar are all legit, if distasteful, and are partly down to the high risk profile of those looking at them and the high failure rate. I don't like them any more than I do payday loans, but so long as people take them out and stand guarantor then they will stay in business.

    Your friend may be better off on a DMP where there is a good chance his interest will be frozen on his debts. Tell him to come post on the DFW boards before he takes this insane loan out!
    DFW Nerd #025
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    Sept 2016 - £10811 Oct £10166 to clear Cleared Since Sept 16:£645 6% repaid Declutter 25 items in November target: 0/25 Make £10 extra a day in November: £57/£150
    • Pixie5740
    • By Pixie5740 11th Oct 16, 10:28 AM
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    Pixie5740
    • #7
    • 11th Oct 16, 10:28 AM
    • #7
    • 11th Oct 16, 10:28 AM
    No it does not need flagged up to the ombudsman. Amigo Loans clearly state that their representative APR is a whopping 49.9% (variable). The reason Amigo can charge these rates is because Amigo borrowers are desperate borrowers that no other lender will touch with a 10' barge pole.

    How will taking out this guarantor loan help your friend? Do his current debts have rates greater than 49.9% APR? If not then it is madness for him to consolidate with an Amigo loan as he will end up paying back even more interest than if he just keeps his debts as they are just now.

    Forget acting as guarantor for him and tell him to contact National Debtline instead for impartial advice. If the debts are business related then Business Debtline might be a better shout.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • Smodlet
    • By Smodlet 11th Oct 16, 11:13 AM
    • 1,778 Posts
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    Smodlet
    • #8
    • 11th Oct 16, 11:13 AM
    • #8
    • 11th Oct 16, 11:13 AM
    All of the above. As soon as I saw Amigo loans, I could have told you the APR from their adverts, 49.9%. The reason they stay in business is because that is considerably lower than the other payday loan companies' ridiculous rates of approximately 1800%. They are all sharks but legal ones. The print may be small but it is there, at the bottom of the screen in their advertisements, ergo legal.

    If you really want to help your friend, have nothing to do with these parasites. As has been said over and over, it will be you they come after when/if he defaults... will you still be his friend then?
    What is this life, if, sweet wordsmith, we have no time to take the pith?

    Every stew starts with the first onion.

    I took it upon myself to investigate a trifle; it had custard, jelly, soggy sponge things...
    • Helvetica Van Buren
    • By Helvetica Van Buren 11th Oct 16, 11:24 AM
    • 208 Posts
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    Helvetica Van Buren
    • #9
    • 11th Oct 16, 11:24 AM
    • #9
    • 11th Oct 16, 11:24 AM
    You haven't been mis-sold anything. The time for reading the interest rate was when you signed for it, not now.
    • DCFC79
    • By DCFC79 11th Oct 16, 4:03 PM
    • 27,742 Posts
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    DCFC79
    No theres nothing wrong with the rates from Amigo, its a cunning model but its 1 that works. They advertise the rates are clear as day, they arent hidden. The rates are most likely high as borrowers stop paying.

    Not sure what you would complain about to the ombudsman.

    Are you aware of what is entailed being a guarantor ?

    Dont go in blind. Be easier for you if you take out a loan as suggested and give it the friend.
    Last edited by DCFC79; 11-10-2016 at 4:09 PM.
    Je Suis Charlie
    • Brooker Dave
    • By Brooker Dave 11th Oct 16, 7:30 PM
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    Brooker Dave
    Parasites will get what's coming to them eventually.
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    • King_Nothing
    • By King_Nothing 12th Oct 16, 8:02 AM
    • 731 Posts
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    King_Nothing
    Parasites will get what's coming to them eventually.
    Originally posted by Brooker Dave
    How exactly are they parasites?
    • MEM62
    • By MEM62 12th Oct 16, 10:06 AM
    • 953 Posts
    • 623 Thanks
    MEM62
    This is their business model. The loan is effectively given to people with a good credit history at rates applicable for those with a poor history. It's not new, it's obvious and I am still amazed that people are stupid enough to fall for it. (Although the advertising is clever)

    It is not illegal and there is nothing to report to the regulators. Taking advantage of peoples stupidity in this way is not unlawful.
    • lee111s
    • By lee111s 12th Oct 16, 10:21 AM
    • 2,464 Posts
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    lee111s
    You haven't been mis-sold anything. The time for reading the interest rate was when you signed for it, not now.
    Originally posted by Helvetica Van Buren


    Who is claiming a mis sell?
    • ReadingTim
    • By ReadingTim 12th Oct 16, 11:26 AM
    • 1,063 Posts
    • 1,406 Thanks
    ReadingTim
    Who is claiming a mis sell?
    Originally posted by lee111s
    Stick around here long enough and you find "mis-sell" is often shorthand for 'didn't read the T&Cs/APR before I signed, only just realise what I've agreed to now it's gone pear-shaped and I need to blame someone else'. Often accompanied by moralistic indignation and threats to 'go to the ombudsman'.

    The correct spelling is "mis-bought"
    • Smodlet
    • By Smodlet 12th Oct 16, 1:14 PM
    • 1,778 Posts
    • 2,958 Thanks
    Smodlet
    Who is claiming a mis sell?
    Originally posted by lee111s
    The OP implied it.
    What is this life, if, sweet wordsmith, we have no time to take the pith?

    Every stew starts with the first onion.

    I took it upon myself to investigate a trifle; it had custard, jelly, soggy sponge things...
    • Gambler101
    • By Gambler101 12th Oct 16, 1:48 PM
    • 59 Posts
    • 120 Thanks
    Gambler101
    Amigo's rates are high because they will basically lend anyone upto £5000, relying on guarantors to pick up the repayments in many of the cases.

    I would imagine a lot of guarantors simply refuse to honor their guarantee commitment, hence the need to charge quite a high APR to be able to turn a business profit.
    The instructions on the box said 'Requires Windows 7 or better'. So I installed LINUX
    • lee111s
    • By lee111s 12th Oct 16, 2:31 PM
    • 2,464 Posts
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    lee111s
    The OP implied it.
    Originally posted by Smodlet


    The way I read it was that the OP realised how extertionate the rates were while filling in the forms. Not that they went ahead with it and had a sudden urge to check.
    • Thrugelmir
    • By Thrugelmir 12th Oct 16, 2:36 PM
    • 51,234 Posts
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    Thrugelmir
    Amigo's rates are high because they will basically lend anyone upto £5000, relying on guarantors to pick up the repayments in many of the cases.

    I would imagine a lot of guarantors simply refuse to honor their guarantee commitment, hence the need to charge quite a high APR to be able to turn a business profit.
    Originally posted by Gambler101
    Debt recovery is an expensive business. Even though the loans are guaranteed that is only a last resort after all other methods are exhausted. The lender cannot simply call on the guarantor the minute a payment is missed. Costs have to be covered. That's the nature of this market. Horses for courses as they say.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • Helvetica Van Buren
    • By Helvetica Van Buren 12th Oct 16, 2:38 PM
    • 208 Posts
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    Helvetica Van Buren
    The way I read it was that the OP realised how extertionate the rates were while filling in the forms. Not that they went ahead with it and had a sudden urge to check.
    Originally posted by lee111s
    I've re-read the original post and agree with what you're saying.

    To answer the OP's question: no, it;s not worth flagging with the ombudsmen. Amigo are offering a service and the interest rate is the cost for doing that service. There's nothing to flag.
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