Movement Against PayDay Loan Companies

CHR15

I agree with this post by Apples2 (edited slightly)

I believe they are a nesessary evil and do serve a valuable service if used correctly

Apples2 wrote: »

Cast your mind back to the time you were desperately applying for your loans.

If these companies weren't around, are you HONESTLY trying to say you would have sought advice about your debt??

It simply wouldn't happen, I'm not saying you personally, but so many people feel the absolutely MUST HAVE the cash. Even though these companies are quite transparent advertising their interest rates and penalty clauses.

People simply don't read them and just want to sign the dotted line, grab the cash and spend it. Months later posting on here about the ill treatment and persecution they are suffering because the loan company keep asking for the repayments.

I'm not trying to defend them but I do see how they have a valid purpose. I just hope I never end up in the position of needing to use their services.

>> Comment about excessive profits <<

Are you suggesting the people who always make all their repayments should pay more for the privilege than those who (for whatever reason) stop repaying their loans??

These companies charge a higher apr because most (if not all) the people who apply are likely to stop repaying at some point.


If I was a shopkeeper on a nice estate and made 100% profit, I would kep my prices the same, maybe even reduce them.

If my shop was in a dump and I lost most of my stock though shoplifting, I would raise my prices to cater for the loss caused by those who won't pay.

mabski

I allways thought a fairer system would be a fixed fee payable for the loan intially but a lower apr. That way the company still makes money on the short term loan but if the borrower does have trouble repaying, the interest would not spiral out of control and put them in serious financial difficulties

CHR15

mabski wrote: »

I allways thought a fairer system would be a fixed fee payable for the loan intially but a lower apr. That way the company still makes money on the short term loan but if the borrower does have trouble repaying, the interest would not spiral out of control and put them in serious financial difficulties

The problem with that is that there would be no issues with simply stopping payment.

There has to be some penalty to encourage people to keep up their side of the contract. Without it, people could stop paying knowing they cannot be penalised so a quick shoulder shrug, and move on leaving it on the back burner.

The level of that penalty is of course, subject to debate.

Kizzy123_2

i think this is a brilliant cause and brilliant arguement, coming from someone who got in ALOT of trouble borrowing from pyday companies a while ago. they are far too eager to give you too much money which you cant afford, far too eager to get it back whne they know you cant afford it and like any other debt its a downward spiral. they also use alot of bullying! if it wasnt available people like myself would just have to have managed without. simple.

~Brock~

Kizzy123 wrote: »

i think this is a brilliant cause and brilliant arguement, coming from someone who got in ALOT of trouble borrowing from pyday companies a while ago. they are far too eager to give you too much money which you cant afford, far too eager to get it back whne they know you cant afford it and like any other debt its a downward spiral. they also use alot of bullying! if it wasnt available people like myself would just have to have managed without. simple.

So you don't think that those people who are able to exercise restraint, self control and common sense should not have any options open to them because you cannot exercise it yourself?

ILW

~Brock~ wrote: »

So you don't think that those people who are able to exercise restraint, self control and common sense should not have any options open to them because you cannot exercise it yourself?

Seems to be current thinking amongst the nannying classes.
Ban everything so that a few idiots do not get themselves into trouble.

Tirian

Dragging this back to the original question ... taking this to FOS will do no good at all. They won't even look at it. FOS exist solely to arbitrate in disputes between consumers and financial services companies over specific failures to observe the obligations they have. If you don't have a specific dispute with a particular company, FOS can not and will not do anything at all.

At best, they will just forward your letter on to OFT, or BIS, or HM Treasury. You'd be better off sending your petition to your MP, or send directly to one of the above. Or to Ian McCartney (chair of the Treasury Select Committee).

As for the issue itself - I don't really see what Payday loans are ever good for, except for very occasional emergencies, or to avoid clocking up a slew of bank charges. And even in the latter cases, there's a very real danger of leaving yourself in exactly the same situation at the end of the following month only with the additional loan charge to pay as well - and then spiralling yourself downward into a pit of debt.

So no, they may not *always* be bad ... but I really don't see that there is enough genuine need for them to build an industry on it.

henrik1971

I can see both sides here. I'm worried about this trend of getting things banned to protect people who are either foolish, thoughtless or lack self-discipline. It was this same thought process that put the mockers on Super Casinos a few years ago. Now many prudent people who just wanted a taste of the Las Vegas experience won't get that chance.
However, on the other side of the coin there is a moral/ethical dimension. Who is the average client at these places? Would it be fair to say that just about everyone who uses payday loans are those people who are least able to afford the massive APRs that are charged?
The answer is not necessarily to shut these businesses down, but to educate people about money management from an early age about what a joke the interest rates are with these companies. The same applies to these high street stores like Bright House. Who in their right mind thinks its wise to buy an LCD telly at £20 a week and end up paying £1200, when Currys sell them for £399. If paying weekly at 29.9% is the only way you can afford the telly, don't get it. Get a perfectly good 28" old school telly out of the freeads for 30 quid.
Perhaps one day all these places will close through lack of business!

confused76

henrik1971 wrote: »

I can see both sides here. I'm worried about this trend of getting things banned to protect people who are either foolish, thoughtless or lack self-discipline. It was this same thought process that put the mockers on Super Casinos a few years ago. Now many prudent people who just wanted a taste of the Las Vegas experience won't get that chance.
However, on the other side of the coin there is a moral/ethical dimension. Who is the average client at these places? Would it be fair to say that just about everyone who uses payday loans are those people who are least able to afford the massive APRs that are charged?
The answer is not necessarily to shut these businesses down, but to educate people about money management from an early age about what a joke the interest rates are with these companies. The same applies to these high street stores like Bright House. Who in their right mind thinks its wise to buy an LCD telly at £20 a week and end up paying £1200, when Currys sell them for £399. If paying weekly at 29.9% is the only way you can afford the telly, don't get it. Get a perfectly good 28" old school telly out of the freeads for 30 quid.
Perhaps one day all these places will close through lack of business!

i'm with you on this one Henrik!

ILW

henrik1971 wrote: »

a joke the interest rates are with these companies. The same applies to these high street stores like Bright House. Who in their right mind thinks its wise to buy an LCD telly at £20 a week and end up paying £1200, when Currys sell them for £399. If paying weekly at 29.9% is the only way you can afford the telly, don't get it. Get a perfectly good 28" old school telly out of the freeads for 30 quid.
Perhaps one day all these places will close through lack of business!

Are you saying that people on low incomes should have to watch old fashioned televisions? That is outrageous. I am sure it must be against the human rights act.