2278% apr?????????

zaksmum

Just seen an ad on TV for a company called QuickQuid, something about payday loans.

The APR flashed up on screen...2278%!!!!!!!!

I couldn't believe my eyes. Did they miss out a decimal point or something? Surely that can't possibly be correct?

And if it IS correct, how can any company be allowed to get away with charging such an extortionate APR?

God help anyone desperate enough to have to take out a loan with a company like that at this time of year. Parents frantic about how to afford Christmas for kids, elderly people worried sick about bills...I'm just amazed. This ad was shown at peak viewing time, too.

How immoral is that?

SuziQ1962

It's true, I have just checked their website,it's disgusting preying on peoples desperation like that!

Consumerist

Payday loans are usually small amounts over short periods so this does tend to produce very large APRs to cover overheads as well as profits. It's nothing unusual for this type of loan.

dunstonh

Surely that can't possibly be correct?

its correct and quite normal. They are high risk very short term emergency loans where people will willingly pay £25or whatever for a weeks advance of £250.

And if it IS correct, how can any company be allowed to get away with charging such an extortionate APR?

because they are high risk very short term emergency loans.

This ad was shown at peak viewing time, too.

Now you can see why they can afford it.

How immoral is that?

its not immoral. There is a market for it and realistically, there it has to be this way.

if the lender was charging more typical APRs they would make about a £1 on weeks advance of £250. That is totally unrealistic and not sustainable. As someone said recently, if you borrowed some money from a mate for a couple of weeks and said you would buy them a drink at the weekend, then the cost of the pint would probably be more than 2278% APR if that had to be put in APR terms.

I'm not saying everyone should rush out and use these companies. you shouldn't. They are effectively the lender of [consumer] last resort for emergency use only when no other mainstream option is available.

Hax

Used correctly (as a true advance on your next pay packet) they can work out cheaper than bank charges for bounced direct debits - or cheaper than the interest on a reasonable credit card balance would work out if you are say £100 short of clearing the balance in full one month.

BUT, they should only be used short term and only if you are 100% confident than you can pay the money back when you next get paid and not have to reuse them. The problems start to happen when people use the payday loans to extend their wages rather than as an advance on them.

As said above, the APR calculation isn't particularly "fair" to use for short-term payday loans. For example, you can typically borrow £100 for 5 days and it will only cost you around £10. How much does one bounced direct debit for a credit card cost you? Normally £12 bank charge + £12 credit card charge + the interest (if you normally clear in full) which may be say £50. So, £10 vs £74 - which would you choose?

Jeff_Bridges_hair

zaksmum wrote: »

Just seen an ad on TV for a company called QuickQuid, something about payday loans.

The APR flashed up on screen...2278%!!!!!!!!

I couldn't believe my eyes. Did they miss out a decimal point or something? Surely that can't possibly be correct?

And if it IS correct, how can any company be allowed to get away with charging such an extortionate APR?

God help anyone desperate enough to have to take out a loan with a company like that at this time of year. Parents frantic about how to afford Christmas for kids, elderly people worried sick about bills...I'm just amazed. This ad was shown at peak viewing time, too.

How immoral is that?

Do you understand what APR stands for?

esuhl

It could be worse: Loan APR of 2.6 MILLION per cent.

Boris Johnson has come under fire after Wonga.com (another loan company) submitted an offer to sponsor free public transport in London on New Year's Eve.

It is shocking, and I do sympathise with anyone repaying at such a high rate of interest... But would it really be better if these loans were illegal and people couldn't get this kind of credit at all?

If, for some reason, I found myself in a position where I was about to be evicted unless I could pay some overdue rent immediately, I might be delighted to be offered a loan at 3000% as a "one off" to tide me over for a few days.

However, if a significant proportion of people using these loans are unwittingly getting themselves deeper into financial difficulty, then there is an argument that the loans should be illegal tp protect people from themselves in the same way that certain drugs are illegal due to their potential for harm.

opinions4u

zaksmum wrote: »

And if it IS correct, how can any company be allowed to get away with charging such an extortionate APR?

As others have stated, if a customer would end up paying more in bank charges, a short term payday loan may fit the bill. It would also preserve a good internal rating with their bank if they avoid getting charged.

God help anyone desperate enough to have to take out a loan with a company like that at this time of year. Parents frantic about how to afford Christmas for kids, elderly people worried sick about bills...I'm just amazed. This ad was shown at peak viewing time, too.

I'm a great believer that being even remotely tempted to fall back on such a loan is a sign of poor financial planning. "This time of year" has been knocking around for around 2000 years and is quite steady in the calendar. People know it's coming and can prepare for it. Much better to save up beforehand than pay interest and charges after the event.

I have never paid a penny in interest on a credit card. I have chosen to use my overdraft as a buffer for laziness (but only when I had money sat in a savings account). Not anymore now that they charge me £1 a day though! It's many years since I last had a personal loan.

Budgeting is a choice. Planning your finances is a choice. Saving up for Christmas (or anything else) is a choice. Borrowing money is a choice. Buying the latest Nintendo Xbox for little Johnny and a new Sony laptop for Kylie, buying a new frock for each of 3 Christmas dos and spending more than you have and choosing to plug the gap with one of these expensive loans is a choice.

People have a choice to prepare or a choice to be stupid. Or a choice to spend less when they don't have the means to buy nice stuff! Kids appreciate a well thought out pressie from parents who care more than a top of the range iPod from parents who spend.

A £25 Monopoly set and time spent with the kids can be surprisingly more successful that a £400 widescreen HD ready telly for the PlayStation to plug in to.

How immoral is that?

More moral than an illegal loan shark operation that kneecaps you when you fail to pay. They tend to prefer customers who say they have a job - they have standards!

BugsyBrowne

I think they should make these pay day loans and Quickquid loans adverts a little bit more realistic, rather than using a 40 year old posh !!!!!! who stands in her brand new kitchen with views of her lovely garden.

bouncydog1

I can't manage my monthly expenses

Instant response - similar number of people requesting that the posters post an SOA on the site, advertising their personal affairs to the world for the sole purpose of providing voyeuristic pleasure to other readers who can provide the stock answers such as 'this is a lot have you considered cutting down' - of course they have considered cutting down. The purpose of an SOA on MSE is purely to enable Mavis to shout out 'oooh Johnny look how much this person spends on food, aren't I clever for doing it so much cheaper'


When people use forums you will always get individuals who are downright nasty - however I do disagree with you regarding the purpose of the SOA's. Whilst you may get the scenario that you have outlined, in many cases the SOA has been a real eye-opener and people have been able to get themselves out of debt with genuine help from others. In many cases people have no-one else to help them, so I personally think that posting on the DFW board can offer genuine help.

zaksmum

Jeff_Bridges_hair wrote: »

Do you understand what APR stands for?

OF COURSE I do!! You'd have to be a bit dumb not to, wouldn't you??