Provi... etc...etchics

Tassotti

Hi all

I own a finance company similar to provident.

Although I make a very good living out of this, I would like to ask people on this forum about the ethics of this business.

I have a varying type of client; from those who blatantly don't wan't to work to those who are working on a low salary and are struggling to make payments for ...whatever.

The clients who are taking the Mick I see as claiming back some of my tax paid. The others, I do feel bad about making money out of the poor.

Advice please

Tass

lynzpower

what APR do you charge.

If you felt like being a generous benefactor then you could always reduce these.

Or dont lend to people who you dont agree with.

Either way it would be reduction in revenue for you, and no MSE is going to suggest you lose money if what you are doing is legal.

Tassotti

Hi Lynz, thanks for responding.

APR on a £200 loan is 365.5%

On a weekly collected credit company, the APR doesn't really apply though.

The costs for collecting the repayments isn't taken into account.

A better way of looking at it is 3% per week.

Still high charges (but slightly cheaper than my competitors)

I work in a small area, so if I reduce charges for one client, then everyone would wan't the same deal.

Tass

lynzpower

Do you take into account "affordability"

Xbigman

Small loans over very small time periods always have horrendous APR's and charges that are very high in comparison to the amount borrowed. Don't feel guilty about that aspect of it.

So did you tell all your collectors to push more loans in the run up to xmas because you know these people are desperate? Do you tell your collectors to encourage rolling one loan over into another so they are never paid? Or, topically, did you try to push loans on anyone who lost out to Farepak?

Its the latter things that make the difference on Ethics, not the basic fact of providing a service to the poor. If it wasn't for the legit doorstep lenders (including Provident) then these people would go to real loansharks who will threaten the borrowers kids, beat borrowers up and steal their property.
Regards


X

georgiasmum

I believe that you are providing a service for people who really need it. As long as your staff don't prey on the vulnerable, encourage people to take on more than is reasonable and provide good service then I think it is ok. I know that the provvie etc get bad press (sometimes it is justified) but my experience of them has been excellent.

silvercar

how do you handle people who fall behind with repayments?

If you were looking to reduce charges for the "genuine", could you reduce the interest rate after a record of good payments?

beanielou

Sorry but i dont agree at all.
I tell everyone to go to a credit union.

astonsmummy

But some people dont know about credit unions.
I've had a doorstep loan and it was a godsend, washing machine packed up, last november and i was skint.

PoorDave

Tassotti wrote:

Hi all

I own a finance company similar to provident.

Although I make a very good living out of this, I would like to ask people on this forum about the ethics of this business.

I have a varying type of client; from those who blatantly don't wan't to work to those who are working on a low salary and are struggling to make payments for ...whatever.

The clients who are taking the Mick I see as claiming back some of my tax paid. The others, I do feel bad about making money out of the poor.

Advice please


Tass

Tricky one isn't it Tass!

Having thought about this extensively recently, i think:

You can argue that if you didn't lend them the money, someone else would.

If you're really concerned, become the guy who has a lower interest rate, i.e. work out how much you would still be happy to bother to run the business for e.g. 75% of current earnings, and reduce your rate accordingly.

Or give each customer a bonus of an unexpected week off paying over xmas!

lynzpower

Or give each customer a bonus of an unexpected week off paying over xmas!

but dont charge them interest in that week!

Beanielou, my local credit union is 23% for loans. Erm no thanks. And you have to have saved something to join up.

Astonsmummy, personally, I would have gone for a catalogue instead, at least you get X amounts of weeks interest free.