Payday UK 1,286% APR

~Brock~

There are certain costs that a lender incurrs when a loan is set up. These include the cost of actually completing the paperwork, staff costs, computer set up, initial correspondence etc. Doorstep lenders also have the ongoing costs of face to face collection, which if their research is to be believed is actually a valued service by their customers.

These costs are the same regardless of the loan term (hopefully that will not be disputed - everything else seems to be ). On a longer term loan these costs are more easily hidden inside the APR.

On the example I quoted earlier (£25 for one week with £1.60 'profit') - if such a loan was to exist in reality and the lender was going to use a 'competitive' APR of ..say.. 15% then the actual interest charge would be about 5p, which would clearly not even cover a commercial lender's initial costs, let alone allow them to commit the unforgivable sin of making a profit. I know this is an imaginary and probably unrealistic example, but if there was a genuine demand for £25 loans over one week then whoever stepped in to fill that demand would clearly have to charge more than what most people appear to believe to be a 'competitive' APR.

The OP was regarding an attention grabbing headline with a story that accused verious lenders of being 'loan sharks'. This is just the sort of stuff that when fed to the braying masses ends up distorting public opinion without giving a balanced and equally compelling 'other' side to the story.

I must admit that I find the effects of media manipulation of views against the finance and banking industry fascinating.

I learnt many years ago to be wary of stupid people in large groups. Probably why I have always hated politics :rotfl:

smithos22

I also got rejected from halifax for a CC application and cant see what the problem is.
I also got rejected for a personal loan 4 months ago ( I know not to apply for too many loans in a short time period)

I'm 29 year old bloke, earn 20,000pa. I have an HSBC VISA I never miss a payment on (had it for 8 years and usually have 500-2000 on it). No other loans.
I checked Equifax creditexpert recently, and have nothing amiss on my credit file.
I'm not on the electoral register (moving in a month so will do it from my new address).
The only thing I can think is my previous addresses are a problem. I've recently finished a degree, and during my time studying I moved each year. I've also lived at 2 adresses since then - 5 moves in total in the last 5 years.

I've often wondered if my previous addresses are my problem. I've also considered lying about this on credit future credit applications, but didnt have the bottle in the past.

Any suggestions??

_Andy_

Well don't lie about it - fraud isn't cool.
If you're not on the electoral role and have moved around a bit, there's your answer.

rsykes2000

smithos22 wrote: »

I also got rejected from halifax for a CC application and cant see what the problem is.
I also got rejected for a personal loan 4 months ago ( I know not to apply for too many loans in a short time period)

I'm 29 year old bloke, earn 20,000pa. I have an HSBC VISA I never miss a payment on (had it for 8 years and usually have 500-2000 on it). No other loans.
I checked Equifax creditexpert recently, and have nothing amiss on my credit file.
I'm not on the electoral register (moving in a month so will do it from my new address).
The only thing I can think is my previous addresses are a problem. I've recently finished a degree, and during my time studying I moved each year. I've also lived at 2 adresses since then - 5 moves in total in the last 5 years.

I've often wondered if my previous addresses are my problem. I've also considered lying about this on credit future credit applications, but didnt have the bottle in the past.

Any suggestions??

You know the reason - not on the electoral roll and 5 moves in 5 years. This will rule out all prime credit lenders.
Fraud isn't good when you get found out.

AliBoo

patch64 wrote: »

I will obviously call them first thing tomorrow but now worried due to the high interest rate and the fact they have been trying to contact me but i was not answering phone.

Has anyone else had this problem with them and can offer some advise please?

I have had the exact same problem, i have had two loans with Payday UK. finally cleared them recently.

I get paid on the 28th of every month and my loan repayment was due out on payday. But they took the money 3 days before!!!:eek: i obviously didn't have the funds as i was just about to be paid.

I say if you are already in debt and want to get back on track then stay away from payday loans. they pray on people who are struggling! I got into a spiral where i had 4 payday loans and my wages were just going on the interest alone. i ended up "needing" to take out new loans to make up for the interest i paid. Not good.
Only take them out if you are cash rich and can easily afford them!! otherwise they will cause you problems, not to mention the countless phone calls and texts that they hound you with!!!!!

Stay away if you want to keep your sanity and money!! :rotfl:

annieapple

It is very easy to get stuck in a cycle of borrowing every month with these loans so the APRs do really add up.

Stay away from these if you possibly can.

Tassotti

AliBoo wrote: »

Only take them out if you are cash rich and can easily afford them!! otherwise they will cause you problems, not to mention the countless phone calls and texts that they hound you with!!!!!

Stay away if you want to keep your sanity and money!! :rotfl:

If you are 'cash rich' then you wouldn't need the likes of Payday Loans.

Agreed though that if you have specified your pay day and the company try and take the money earlier, then this is obviously the fault of the company.

That is probably why no extra charges were incurred by the previous poster.

Many times, it is actually the bank that creates the problem.

Tassotti

minimike2 wrote: »

APR means nothing on a payday loan. The clue is in the "A". ANNUAL percentage rate. Since you dont keep a pay day loan for a year, it makes a mockery of the APR system.

APR is increasingly becoming outdated and distorted in many of the ways in which it is used. But since the FSA are on too much of cruisade to put the squeeze on small businesses, it is unlikey anything will be done about it.

An analogy I quite like.

I booked a 3 night holiday and paid £180 (£60 per night)

Pretty reasonable...However, if I had stayed there all year it would have cost me £21900 (Ouch)