borrowing money from door to door collectors

clutton_2

a friend of mine in severe financial distress, is thinking of borrowing £100 off a well respected company which will then send someone round every week to collect the repayments. (she won't let me lend it her, I've offered). She knows some others who borrow like this, (apparently some of these people dont have bank accounts and so can't borrow anywhere else). Apparently if there is a week when they dont have the repayment money, no one gets heavy with them. But, of course they pay back a lot more than if they had gone to a bank. Would you reccomend she does this and if so why, and if not, why not ? How else could she borrow money ? There is no cooperative in her area.

regularsaver1

not in this way

what is she needing the £100 for - consolidation?

clutton_2

i think she is just thinking ahead for school stuff for the autumn, new schools and all that

regularsaver1

some shops do deals on this, to pay so much per month
the local school might have links with local shops that sell their uniform?

lil_me

I wouldn't touch it with a barge pole, these loan companies charge such a high amount of interest I would sell whatever I could first. Over 400% APR, no thanks. £100 at a few pounds a week sounds great, until you realise how long for and how much you pay back

Has your friend checked to see if there is a local credit union in her area ? Most areas do now.

mr_e_5

My mother in law's friend does money lending for a company called Greenwoods and she has told me how they operate. I would strongly advise against your friend borrowing in this way. Do everything you can to persuade not to go down this route as it will just get them into a hole. The tactics of these types of companies are to keep you in debt and will keep lending more money and you pay high % apr for the priveledge.

If you are in a position to help then explain you do want the money back but can't see them making a big mistake. If you know their financial state already then they obviously trust you so will listen.

roswell

DONT DO IT ... it costs a fortune and when you cant repay they offer to lend you more .... and so the cycle starts and continues, worst case why not lend her 100 and the same interest rate you get in your savings account and work out the repayments that she can pay you. eg £100 + 4.5% = £104.50 / (the amount of payment weeks / months etc)

Warriorsith

Tell her she shouldn't do it, shes probably thinking of going with Provident who like any company or out to make a quick buck. They'll charge her an excessive repayments so if she borrows £100, she'll have to pay back say £165, which doesn't seem much but as a percentage the APR is silly. Also she repay it at a £5 a week which would take over 8 months to repay it.

You wanna get the £100 and talk to her again about not doing it, as she disagrees take £100 out of your pocket and place it in her hand and say she that you'll be offended if she doesn't take it after all what are friends for? A Friend in need is a friend in deed.

Failing that can she not raise the £100 over the next 2 months from working? surely your wouldn't want to buy a child's uniform until nearer term time as they grow over the summer and by the time September arrives the cloths might be smaller!!

clutton_2

thank you everyone for all the really helpful responses - very useful.

Careful_girl

One of the cheapest places to buy school uniform is the school itself. They buy in bulk and I have always been amazed at the prices our school charges. As for the shoes don't buy till the day before term starts! They are the most expensive and feet seem to grow as soon as they see new shoes.
Schools also have nearly new uniform at great prices.
As for the door to door stuff NO WAY. Direct debits seem less scary. What about her borrowing the money from you and you picking up the repayments on a regular agreed system when you pop round for a cup of tea and tell her all the new moneysaving tips!!! :money:
All the best,
CG.

homersimpson_3

Would you reccomend she does this and if so why, and if not, why not ?

Definately not- the interest rates from companies like this are extortionate and it's one step down a slippery road. if she does it this time not only will she pay a huge price (large amount of interest) but will also be tempted to do it again and so the cycle continues. Get her to post her statement of affairs and let's see if we can save her some money. if she is afraid do post it on site for her- i've done this for my friends and they've saved because of mse.
if for school uniforms - has she spoken to dwp about benefits she may be entitled to or school etc.

How else could she borrow money ?

simple- you. Go around the house with the actual cash and say you'll be offended if she doesn't take it. If you says no put it in friend's hand and walk away. If she wants to pay it back (I definately would) can she do so at say £1 per month (or would you miss money and want it back sooner). can friend do something for you in return e.g. job you would normally pay tradesman etc.

suggests friend contacts cab, payplan, cccs etc