Horrifying Email

CLAPTON

The issue surely is what are the alternatives?

-given that these loans are generally low value and so have high setup costs (i.e. the cost of administring a £100 is pretty similar to £10,000

-for whatever reasons (some where there will be great sympathy and some not) the people getting these loans have a high propensity to default

then we seem to have only a few options

1. outlaw high APR loans
this will probably mean that the Loan Companies close down so meaning that the poor people will be unable to get loans at all... maybe a good thing

2. The taxpayer could subsidise these loans directly...
probably politically unpopular and would probably lead to a very high rate of defaulting

3. there could be an major extension of the social fund... taxpayers money but given to the deserving poor...
another difficult political issue

4. expansion of credit unions but these usually expect people to save with them before allowing loans which wouldn't often suit in these circumstances

5. or of course leave things as they are

none of these seem ideal

sequence

never-in-doubt wrote: »

Hey I think you'll find we all see what you're saying but you have to realise it's the risk that comes with it that generates high APR's. Lets say for instance, I know you and you're skint and you say to me 'lend me a tenner til payday and i'll buy you a beer'.

That £10 would be charged at a rate of 250% - 300% APR as a pint is likely to be £2.50 - £3.00.... same difference but you don't look at it like that.....

Isn't that 25% interest?

real1314

sequence wrote: »

Isn't that 25% interest?

25% WeekPR; x 52 for APR?

never-in-doubt

sequence wrote: »

Isn't that 25% interest?

lol yea - but APR would actually be 1500% (assuming £10 loan for 1 month to earn a £2.50 beer) ) - in fact i've now confused myself so much that i'm going for a pint!!

Gorgeous_George

When you take a loan there is a fixed cost for the administration. Borrow less and the admin costs make the loan very expensive when measured as APR. So long as the total cost is clearly spelled out I don't see a problem.

Making these loans illegal would mean those that need them would have no options. People have a responsibility to themsleves and should be given the choice. However, I hate spam email and every company that sends such rubbish should be fines. Taxing 'business' emails 1p per recipient would be a start.

GG

movingforward2010

_Andy_ wrote: »

No-one's forced to take a loan with a high APR. And yes it is legal.

it should be illegal!:eek:

dfh

Considering that these loans are aimed at people who are not financially well-off,they are likely to cause them hardship.These people have probably been rejected by mainstream lenders and have no choice but to sign on to these unfair T&C's.These companies should be regulated.We need to look after the vulnerable sections of society.

CLAPTON

dfh wrote: »

Considering that these loans are aimed at people who are not financially well-off,they are likely to cause them hardship.These people have probably been rejected by mainstream lenders and have no choice but to sign on to these unfair T&C's.These companies should be regulated.We need to look after the vulnerable sections of society.

of course that's right but effective regulation (i.e. e.g. limiting APRs to say 100% ) would probably mean the companies would close down leaving no legal way for vulnerable people to get any credit atall.

Snakeeyes21

Of corse people have a choice. They dont have a gun held to their heads.
whats so unfair about the T&C?
do people not know what the costs are?
Are people not told what charges are made for non payment?
Are they not told they are short term loans that are costly over a long period?

_Andy_

dfh wrote: »

and have no choice but to sign on to these unfair T&C's.

1) Everyone has a choice whether or not to take a loan.

2) What are the T&Cs that you believe are 'unfair' exactly?