Typical 621.8% APR

southernscouser

pudding06 wrote:

I think its a problem advetising this at christmas as many people will just think we'll be ok for christmas with the £500 but will really be struggling to pay it back over the 3 months, then will end up taking out another etc, etc, etc, Its the cycle of debt that is a problem.

puuds

Thats a very valid point pudds. But I was in the same debt cycle and I was using high street banks.

DavidHM

Compare that to a high street bank loan. When do they tell you about the interest being front loaded? Early payment penalties? The real facts about PPI?

What do you mean by front loaded? If you mean, you pay more interest when there's a higher outstadning balance, there's no other way to run things... if you mean you have to pay off all the interest first and then all the capital, that's simply not true although I have seen it quoted on here many times.

Early payment penalties are in the loan documentation - quite clearly in mine - where they exist. Where they do exist they are limited to 2 months' interest for personal loans.

And yeah, PPI is a dirty rotten scam that is overwhelmingly mis-sold. But even if they hit you with early repayment penalties, a high rate of interest and PPI, they still won't manage to charge you £200 for borrowing £500 over three months.

GettingThingsDone

I agree with Pudds there, as many of us know, it only takes a small series of events to blow you off course, and next thing you know your best laid plans have gone to @&!*£$^

Sometimes it's too easy to rationalise taking out a loan of this nature ('its alright, I'll pay it off early', 'x owes me some money' etc) which is obviously how it works.

I suppose to the 'naturally gifted' financially astute, we're the odd ones for taking out 19.9% etc credit cards, overdrafts etc

dawn2dusk

I agree with Pudding 06, with xmas coming up it is targetted for people with low incomes with that APR. That is what i find ethnically and immorrally wrong.

southernscouser

DavidHM wrote:

What do you mean by front loaded? If you mean, you pay more interest when there's a higher outstadning balance, there's no other way to run things... if you mean you have to pay off all the interest first and then all the capital, that's simply not true although I have seen it quoted on here many times.

Early payment penalties are in the loan documentation - quite clearly in mine - where they exist. Where they do exist they are limited to 2 months' interest for personal loans.

And yeah, PPI is a dirty rotten scam that is overwhelmingly mis-sold. But even if they hit you with early repayment penalties, a high rate of interest and PPI, they still won't manage to charge you £200 for borrowing £500 over three months.

What I mean is that at the start of the loan you pay say 95% interest and 5% loan. Then each month the interest payment goes down and the loan payment goes up. It's not uncommon to have a loan for well over a year and still owe more than what you originally borrowed.

I know early repayment penalties are in the documentation. Along with hundreds of other T&C's. Thats the point I'm trying to make. This loan is basically black and white. It's like Ronseal. Does what it says on the tin. It's not there to con you. It's upfront and honest unlike high street banks.

As for PPI it's a bigger rip off than the loan if you go to claim off it only to find out you aren't covered! :rolleyes:

DavidHM

It's not uncommon to have a loan for well over a year and still owe more than what you originally borrowed.

How? Because if you were being charged more interest than your monthly payment, the balance would never, ever go down and the loan would never be repaid.

(Unless the payment protection insurance is paid for 'up front' of course, so it goes:

£5k loan + £1,500 PPI premium + Interest at n% on the outstanding balance
divided by term of loan in months = monthly payment)

cattie1

I agree with everyone! :rotfl:
It is true-I have myself been in the situation where you think "ooh if I borrow this now it will get my out of this bill/mess and I can pay when I get my pay" then you get your pay and say the washing machine breaks and you go back,
=vicious circle
they are certainly aiming at "financially challenged" people in the lead up to xmas!

southernscouser

DavidHM wrote:

How? Because if you were being charged more interest than your monthly payment, the balance would never, ever go down and the loan would never be repaid.

(Unless the payment protection insurance is paid for 'up front' of course, so it goes:

£5k loan + £1,500 PPI premium + Interest at n% on the outstanding balance
divided by term of loan in months = monthly payment)

Yeah with PPI I'm sure mine were charged upfront. Which is why people can still be left to pay more than they borrowed after a period of time (depending on cost of PPI).

pudding06

It's not uncommon to have a loan for well over a year and still owe more than what you originally borrowed.

I agree with this - I did with my hafifax cc until I realised that the ppi was actually causing my balance to rise every month.

ANd I (before my dfw/lightbulb moment)I had cut up the card and was just paying the min payments. I thought there was a mistake when after 18 months I looked at the statement and I owed much more than when I started.

- obviously I was ignorant then:D

not like now:rotfl:

pudds

ZTD

DavidHM wrote:

£5k loan + £1,500 PPI premium + Interest at n% on the outstanding balance
divided by term of loan in months = monthly payment)

The other way of doing a loan is...

£1,000 loan for 3 years at 5% means £150 in interest.

So day 1 you owe £1,150 and you pay it off like an interest free loan.