'What’s fair interest on a payday loan?' poll discussion

jeanmd

teddyco wrote: »

High interest loans pale into insignificance in relation to the amount of taxes that people are forced to pay every month to
support wasteful government spending.

The Obama administration, with major support from the U.S. Congress, is set to approve a massive tax cut bill
that will stimulate growth and help the poorest Americans through these troubled economic times.

We should stop focusing on attacking banks and financial products and start attacking the government to pressure
more tax cuts to help small businesses get started, help the poorest families and promote job growth in impoverished areas of the country.

High taxation is 'legal theft' and it has not only destroyed the middle classes, but it's hacking at the thread that the UK
is currently dangling.

I agree, when Australia had problems at the same time as us they gave everyone a large tax rebate to kick start the economy and get everyone spending again. It seems to have worked.

1984ReturnsForReal_2

The poll results speaks volumes.

People do not understand APR

tomwakefield

I'm amazed the number of people who think the maximum profit companies should be allowed to make is under £1 on a £100 loan (10% APR works out as 83p in a month).

katyboo123

Quite interesting how the maximum interest is 10% most popular, but the maximum paid back is £10.

I think that 50% APR is fair given that Credit Repair cards for incredibly impaired borrowers are around 39.9%+, the fact that they're not going to carry out a credit check and the convenience of it all. However, bearing in mind only the very least credit worthy people are likely to consider these, I think that propensity to pay is low and given that, they should be either altogether removed or managed like a credit union.

That said, I have had a payday loan in the past and I can only warn against them. I borrowed £100 and the amount repayable was £30. The next month, when I paid it back, I was sent an offer of deferring the payment as a 'valued' customer. This meant I was £130 in pocket for another month out of my wage so, I did, and this meant the following month I needed to repay £175 (£100 orig, £30 initial interest, £45 interest on the £130 for an extra month of borrowing - figs approx and illustrative only!).

And so it went on.

I ended up repaying it, having the tightest month and would now never ever take one again. In my opinion, they are the absolute last resort (after exhausting cutting back, Credit Unions, selling gold, old phones, Ebaying, 2nd jobs, family loans, credit repair cards and so on) and the repayment needs budgeting for. No matter how tempting it is to defer their repayment and no matter how easy it is to click yes on that 'emailed' renewal agreement - don't or it will snowball out of control.

Just my opinion (bored in the office this fine cold Monday morning!)

katyboo123

Oh and another thing. I think employers should give out loans and deduct payments through payroll for people who are really strapped - like the NHS Credit Union. Just a thought! X

brizey47

Interesting that the majoity think an APR of 5% is fair, but also think a monthly charge of £10 is also fair which is of course an APR of 120%

udydudy

I think APRs of 50-100% should be allowed for borrowers with impaired credit. Having been in the finance field(not impaired lending), we have to be in their shoes as well. They are taking the high risk that a major portion of their portfolio(loans) could end up being a loss. Ofcourse having never taken one myself, I am not very sure how they secure themselves. But surely their cost of refinancing would be pretty high along with high insurance costs for insuring against defaults.

But surely the ones where the APR is something like 500% or 1000% should be totally banned and made illegal!!!.. its like highway robbery.

I am aware some of the impaired borrowers could have landed in that situation due to loss of income or short term one-off costs. But from my experience within my circles( office colleagues & friends), a large proportion of people are not even bothered to save for a rainy day. One or two of them even would forsake their lunch rather than skip the evening pub crawl!!!.

Its a bit hard to feel sympathetic to such people.