Setting up a Payday loan company

immoral_angeluk

I don't think your credit checking system would work. I've seen a lot of clients who haven't yet defaulted but are in a terrible mess financially and people with loads of defaults but who are now back on the straight and narrow. You'd need to look at their whole situation to be able to give a proper judgement about the suitability of giving them a payday loan but to do that you would need further training in giving debt advice.

CLAPTON

well a rare thing indeed; an almost amusing troll

battyboimatt

Magic, yes don’t worry we have done the homework, yes we will need to convince the OFT hopefully we have demonstrated we can comply with everything, already looked at registration with Data Protection, everything will be secure on a dedicated server with SSQ encryption, We will have a dedicated complaints person who will deal with any complaints who will ackowdlge the complaint and response within three working days, the complaint will then be debt with and a final response issued within 28 days (14 working days) I think that side of it is all sorted, just looking into people opinions etc, we want to be a service which is different from others, which hopefully will make people want to borrow from us. We want to help the people who don’t have access to main stream credit without having their eyes out or pushing them over the edge, far too long have people been abused and taken advantage of because of silly mistakes, so any suggestions, options anything I really am great full of

happy_peach

What about a company that allows people to borrow to clear their existing payday loans and pay back over 6 or 7 months?

battyboimatt

And no not a troll Clapton, oh yes a troll who has a post count of 302, don’t most trolls just post 1 or 2 posts, anyway Ill close this thread down then, I was looking for genuine advise and feedback into a company that would be different but hey why should I bother, I should just maybe rip people off charge them extortionate rates and just slap a ccj and default when they don’t pay. For the likes of Proliant thank you very much appreciate it.

Matt

immoral_angeluk

There's no need to go on the defensive matt. You're getting advice and opinions from other posters?

tigga_1961

hi good luck in your venture, not sure pay day loans is the answer tho there is enough out ther already but what about going for the doorstep lender in competition with provident, that way you see your customers and personally i feel if your going to lend to high risk clients you have a better chance of recouping your money that way, especially if your rates are cheaper, most people with adverse credit dont need a quick fix they usually need the loans over a longer term at affordable rates.Also as much as it goads me flm loans have the right idea with guarantor loans, that way you always get your money back,and if yo have any jobs im looking ;-)

battyboimatt

Sorry Immoral yes getting great stugg back but it just annoys me that when serious posters with lots of previous posts, actually does post they get accused of being a Troll, it just annoys the hell out of me, oh how MSE has slid, it used to be a great place, but these days not so nice and warm.

~Brock~

PROLIANT wrote: »

Example, you could offer a loan for say £500 for 12 months @ 29.9% APR, total cost of the loan would be £649.50, you could absorb the credit check fee in to this so lets say for the sake of arguement that you buy a bank of 100 searches from Experian for £500, you can use these as you go sort of thing so if your average loan amount is £400 per person and you lend to 100 people that would equate to £5 per borrower for the cost of the credit check, 29% for the capital loan and 0.9% for the credit check fee.

If you use this a rule of thumb when calculating the cost of lending you can set the represented figures how you please e.g. £100 @ 29.9% APR could be broken down on the books as 24.9% for the loan an 5% admin fee = 29.9%?

With respect proliant (and we usually agree on most things) your plan is too simplistic. If you offer unsecured loans to sub prime borrowers you will get default rates in excess of 25%, particularly if your loan terms are taken beyond the usual 26 weeks that doorstep lenders typically use. This cost must be absorbed into the up front pricing, together with all the other costs, collections, administative, regulatory etc, associated with running this type of business.

There is no way 29.9% APR would come anywhere near acheiving a sustainable business.

immoral_angeluk wrote: »

The trouble is you're targetting a very vulnerable market. Too many payday loan companies are glorified loan sharks. What you need to do is strike a balance between a responsible lender and a subprime lender, that is treating customers fairly and not taking advantage of their vulnerablility, and not jumping straight onto defaulting and CCJs because they're a month late. You also need to be willing to work with clients who may be in huge financial difficulty and feel that a payday loan is their only option where it is really only going to compund the problem. I think it would be a good idea to incorporate some kind of debt advice system in with the company and to work with people in financial difficulty and referring them to other sources such as CAB, national debtline etc if a payday is just going to make their problem worse. For those where the payday loan would be appropriate and not making matters worse, you should have a fair fee structure and some flexibility with regard to people who end up not being able to pay back straight away.

And there lies the catch 22 that is modern day sub prime lending.

Everyone is banging on about how difficult credit is to come by but as soon as someone is actually granted a loan, the minute they cannot pay they suddenly become 'vulnerable', and can rely on an increasingly one sided list of regulation to ensure that they do not have to repay the loan to anywhere near its intended contractual terms.

immoral_angeluk

battyboimatt wrote: »

Sorry Immoral yes getting great stugg back but it just annoys me that when serious posters with lots of previous posts, actually does post they get accused of being a Troll, it just annoys the hell out of me, oh how MSE has slid, it used to be a great place, but these days not so nice and warm.

As I said in my first post, there's a lot of animosity towards payday loans on this board. You might be better off going to the employment boards. Don't take it personally. We do get a lot of trolls on this board so that combined with it payday loans was always going to arouse suspicion.