Provident - Non money saving tip of the week !

Celtic

A letter from Provident personal Loans arrived today.
The example quoted was for £300, 55 weekly payments of £9,
The APR quoted is 177%
Is this legal ?
Are they serching for customers of the failed christmas club ?
Strange how we are not tempted !

Rafter

Yes it is legal. The government don't think capping APR is a necessary step to stop loans like this which may be the only way some people can get credit.

If you were on benefits or a low income and your washing machine broke for example, would you be prepared to pay £9 a week for a year in return for a new one, rather than have to go down the laundrette?

If you wanted to buy presents for your kids for christmas and could afford to save £50 before chirstmas, but wanted to spend £300 would paying £9 a week for the whole of next year seem reasonable?

These loans are also collected door to door by an agent usually, so their salary has to be paid. The people who take out the loans aren't the most credit worthy either so you have to take that into account.

There is also scale and efficiency to take into account. If you borrow £10000 and pay it back via direct debit the cost per £ lent is a lot lower than Providents collecting door to door and processing lots of very small payments.

Think of it like this. If you needed £300 now and could pay it back in a weeks time how much interest would you pay? Does £6 sound reasonable? Or 55 instalments with average interest of £3.50 a week? Because that is 177% APR. An apr of say 10% on a loan this size would be an average interest of only 11p a week, hardly enough to cover all the costs (forms, postage, payment processing, salaries etc) associated with lending you the money, and about 1 minutes work at minimum wage - hardly enough time for a Provident agent to get to your house, take your money, do the paperwork, go to the bank to pay the money in etc etc etc.

I'm not defending doorstep lending, but believe it or not, Provident are regulated, they aren't loan sharks, they do cater for a set of customers who are ignored by the main banks. Just count yourself lucky that you have choices that others don't.

R.

burbs_2

As Rafter said these loans are the only option some people have. They build their credit up with it etc. I think their rates are mental but the extra risks involved make them neccesary.

I dont like companies such as Provident however they provide a service that if wasnt needed they wouldnt be around.

Also i dont think they are targeting the christmas club people solely, they usually send out mailings around now, also at the start of school terms - its called good marketing.

Astaroth

I would consider it more worrying that they believe that I am the sort of person that would be interested in this sort of offer more than anything else.

As Rafter says, if you had the more traditional APR of 10% on a loan of £300 the loan company would only receive back £30 per year for which they have to cover all the administration costs of running a company/ loan plus the risks of people defaulting on the loan. Add to that that Provident have to pay someone to come around and collect your weekly payments and it is easy to see why they cannot offer a standard APR.

black-saturn

Last christmas someone from Provident knocked on my door and offered to give me £250 worth of vouchers to spend straight away and said that next friday he would come round and take £2 off me as first payment. I'm not daft so I declined but before I did I pretended I was slightly interested and asked him what the interest rate was. I can't remember what it was now but I know it was a lot, over 100%. Then he started saying things like "Go on, go out now and treat the children, buy them loads of toys". I can't imagine how tempting that would be to some people. Then I watched through the window as he knocked on all my neighbours doors and some of them took the vouchers.

burbs_2

black-saturn wrote:

Last christmas someone from Provident knocked on my door and offered to give me £250 worth of vouchers to spend straight away and said that next friday he would come round and take £2 off me as first payment. I'm not daft so I declined but before I did I pretended I was slightly interested and asked him what the interest rate was. I can't remember what it was now but I know it was a lot, over 100%. Then he started saying things like "Go on, go out now and treat the children, buy them loads of toys". I can't imagine how tempting that would be to some people. Then I watched through the window as he knocked on all my neighbours doors and some of them took the vouchers.

Dont see the problem with this to be honest. Its business

needaspirin

It always pains me to see how the poorest people get the worst deals. I understand the reasons why Provident, Shopacheck etc charge exorbitant rates but still feel that they are exploiting the very poor and the ones who are incapable of understanding interest rates.
It is always better to see if there is a Credit Club in your area. This is an arrangement where a group of people pay a regular amount each week/month. All the contributions for a particular week/month are paid to a particular member.
Alternately, saving with a Credit Union entitles one to low interest short term loans.

Paula_anne

hi i did make the mistake of borrowing off provident and when i asked my agent if i could pay it all off after a couple of weeks she was shocked, she explained that not many people pay the full loan back, glad i have learnt now.

robinson79

i too had a provident loan of £150 when i was completely broke, and maxed out on the credit card. i paid it off early with a lump sum, and to my surprise i got a call a few days later saying i was due for a rebate of part of the interest . so, they're not all bad...but i would only use them again if i had no other choice
x

carolwat

just want to thank those of you that have actually taken the time to get the facts on provident and their agents and to post it for those who obvisouly havnt really got a clue and just feel that they can slate provident without actually understanding what we do. im an agent and i dont prey on the vulnerable, more the opposite infact as it just wouldnt make good business sense to do that. if a product for paid for early we do issue rebates rather than just pocket the interest anyway.

thanks again to those in the know trying to put others in the know.

regards
carol

orlwaysbroke

I agree with many of the posts above.

I've been using Provident for several years - bankruptcy doesn't do much for your credit rating , but still I need a car to get to work, and occasionally suffer from low cashflow ( kids school trips etc ).

The rates ARE high but I know that every week my agent will call and collect his cash. I can't miss a DD. I can't go over the limit.

My credit record is better now than it has been for many a year.

Another way to view Provident is that the amount repayable on a £1000 loan is around £1500 over a year. BUT I would have to be lumbered with it for 3 years via standard lenders and still pay back the £500 interest.( I KNOW the arguments for and against).



The long and the short is that Provident is a business, as are it's agents.
I've always accepted how much I'll be paying.
I'd like to pay less - but I can't.