Horrifying Email

sequence

Yes why do we need to constantly protect people from themselves?

dfh

It is about what is reasonable.If we look at late payment fees for Credit Cards,they were reduced from 25 to 12 pounds because 25 was deemed excessive.Companies should make a profit from lending as it is a business for them.But what they charge should be reasonable.This is the basis of the ongoing Bank Charges case.They were in the T&C but people are asking whether they are fair.Similarly,the APR's of some loans which go into 100% and above need to be looked into.

_Andy_

Out of interest, what would you define as 'reasonable'? (Not being argumentative, I'm just curious)

Gorgeous_George

Let's assume that the fixed costs for a loan are £10 and this covers a credit check, identity check, transfer fees, administration (I suggest this is likely to be more than £10 - the social lending site Zopa charge £118.50 for example).

Borrow £50 for three months at 0% interest and you will repay £60 (original loan amount and the admin fee). The APR would be (if my sums are right this Sunday morning) 116%. That is with the company making nothing. Using Zopa's fee of £118.50 and the APR would be 1,174%.

Limiting people's choice would only serve to encourage local thugs to set up their own lending systems.

Is that what you want - 'cos that's what'll happen.

GG

_Andy_

dfh wrote: »

It is about what is reasonable.If we look at late payment fees for Credit Cards,they were reduced from 25 to 12 pounds because 25 was deemed excessive.Companies should make a profit from lending as it is a business for them.But what they charge should be reasonable.This is the basis of the ongoing Bank Charges case.They were in the T&C but people are asking whether they are fair.Similarly,the APR's of some loans which go into 100% and above need to be looked into.

I don't think CC charges and loan APRs are at all comparable, purely because CC charges are something many people won't make themselves aware of (by not reading T&Cs etc). In contrast, loan APRs are so blatant there's no way anyone could not be aware of them.

RobertoMoir

Snakeeyes21 wrote: »

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?

Of course these things are legal, but I still despair of them. Some things are no more than a tax on poor maths skills and desperation.

ScattyStudent

That is pretty scary! QuickQuid charge an APR of (wait for it lol) 2356%
:eek::eek:

jamesd

dfh wrote: »

These companies should be regulated.

They are regulated by the Office of Fair Trading and must obtain a consumer credit license from them in order to lend.

The OFT investigated doorstep lending and didn't propose eliminating that even though the rates can be a few hundred percent. Logbook lending is probably even more risky as a group due to the likely larger amounts of money probably being lent.

Anyone considering one of these loans should first visit http://www.lenderscompared.org.uk/ . That's the site set up by the Office of Fair Trading to be a consolidated source for home lenders as a result of their investigation and it may find a cheaper local lender.

~Brock~

Using these APR examples to make headlines is very often simply down to lazy and/or sensationalistic journalism.

The undeniable pointlessness of APR's as a measure of short term lending seldom gets a mention - wouldn't look good would it?

dfh

RobertoMoir wrote: »

Of course these things are legal, but I still despair of them. Some things are no more than a tax on poor maths skills and desperation.

I have no sympathy for people who use such loans to purchase non-essentials like big TV's ,etc.But there should be some protection for vulnerable people on low incomes who have to borrow at these rates to make ends meet.