Provident...? (merged)

ASG_2

They justify their rates because of the "door to door" service they offer. People with poor credit ratings/benefits only income CAN get loans at reasonable rates. Get down to your local credit union.

Need_More_Money_2

skbuncks wrote:

Has anyone got this beat for an offer:
Received a letter in the post today from Provident Personal Credit offering me a cash loan from £50 to £500.
The example quoted is £300 with 55 weekly installmnts of £9. Total payable £495. Typical APR 177% . Yes thats 177 %. :eek: Bargain if ever i sore one.

What really annoys me about this is that the only people who would take out this loan would be the poor with very bad credit ratings, definetly a case of the poor getting poorer and the lenders being ethically irresponsible. W**kers

skb.

Is that really 177% APR. I don't claim to understand APRs, but from the figures you quote, anyone taking out this loan would pay a total of 65% (495-300) of the original loan in interest. Where does the 177% come from?

Coveredinbees!!!!

Need_More_Money wrote:

Is that really 177% APR. I don't claim to understand APRs, but from the figures you quote, anyone taking out this loan would pay a total of 65% (495-300) of the original loan in interest. Where does the 177% come from?

Yes but it's on a decreasing balance so it not as simple as that.

Need_More_Money_2

Coveredinbees!!!! wrote:

Yes but it's on a decreasing balance so it not as simple as that.

Was thinking of mortgages where interest often charged yearly. So the 177% comes from daily interest charges?

Coveredinbees!!!!

http://www.bbc.co.uk/consumer/your_rights/credit.shtml

this explains it better than I can

Coveredinbees!!!!

sorry me again here is a handy calculator for loans

http://www.pem.co.uk/common/calculators/loan.html

Rafter

I'm not defening Provident or what they do, but lending small amounts of money to high risk people and collecting the money door to door cannot be done for free.

If you were running a business lending money and were lending 10 people £100 each over 6 months (26 weeks) collecting weekly and there was a 10% probability that each person wouldn't repay you what would you charge?

Here are some assumptions:

It takes 5 minutes to collect from each person and 10 minutes walking between their houses (one hour in total) and you pay your collector £7.50 an hour.

It costs £10 to set up each loan in staff time, identity checks, providing paperwork etc

It costs £1 a month per loan in administration costs for computer systems, banking payments, etc.

As a 'bank' you can borrow money at 5% yourself in order to fund the loans.

Here are your costs:

Collections: £7.50 per week x 26 weeks = 195
Loan setup: £10 x 10 = 100
Admin costs: £1 x 10 x 6 = 60
Bad debt costs £100 x 10 x 10% = £100
Cost of money £100 x 10 x 5% x 50% x 6/12 = £12.5

So your total costs are £467.5 of which only £12.5 is the amount it costs you to borrow the money!!!!!!

Therefore the minimum you need to be paid back to make any profit at all is £1467.5 from your 10 loans. The annual percentage rate equivalent (APR) of your loans (before profit!) is 384%

Running a doorstep lending operation to high risk people is an expensive operation.

Whether or not it should be allowed is a matter for government, but if it was outlawed would illegal lending still go on?

I guess there will always be desperate people who want to buy christmas presents for their kids even though they really shouldn't - not sure how you can stop them from trying, except through education.

R.

Kzlnd

I received a letter from the scum around a month ago.. I had heard about them, their nasty APR rates and nasty collectors, so certainly wouldn't touch them.
I was quite annoyed that they'd sent me a letter, not sure WHY they would send me such a letter, I don't have bad debts/poor credit rating etc..
I decided to read the laughable letter and yes 177% was quoted so I called the idiots up and complained about receiving the letter and the disgusting rates they charged.
I told them that I wanted to be removed from their database, but was told they had no record of my address details but would make a note on the system not to send any mail shots to me in future..
I received another letter last week :mad: :mad:

The people they target (usually?) are those with little access to money and those who have had problems in the past and yes some will be high risk but to charge such appallingly high rates of interest is pathetic, surely something should be done about it? :rolleyes:

savvy

Coveredinbees!!!! wrote:

sorry me again here is a handy calculator for loans

http://www.pem.co.uk/common/calculators/loan.html

Hmm thanks for that, I tried out the millionaire calculator and have just found out...............it's never going to happen!!!

ASG_2

Rafter wrote:

Running a doorstep lending operation to high risk people is an expensive operation.



I guess there will always be desperate people who want to buy christmas presents for their kids even though they really shouldn't - not sure how you can stop them from trying, except through education.

R.

1] Who says that all provi customers are high risk? People who are on low incomes/ benefits usually have the most stable income
2] Like I said - get down to your local credit union. They lend to members, minimum deposit is usually £1 AND they often provide money management courses. Directors of credit unions are volunteers, so profits are returned to members.