Time for a new campaign? Short term loans scandalous

Dabooka

Right, I sub my pal £40 on a Friday night, and he pays me a week later and buys me a pint for £3.

Not an entirley unreasonable or unrealistic scenario, but what is that as an equivalent APR?

EDIT: Cross posted with Paddy above, but the point is the same!

opinions4u

Dabooka wrote: »

Right, I sub my pal £40 on a Friday night, and he pays me a week later and buys me a pint for £3.

Not an entirley unreasonable or unrealistic scenario, but what is that as an equivalent APR?

EDIT: Cross posted with Paddy above, but the point is the same!

In the region of 4300%.

Dabooka

opinions4u wrote: »

In the region of 4300%.

What?! It's a disgrace etc etc...

ILW

Dabooka wrote: »

What?! It's a disgrace etc etc...

Start a campaign.

ILW

Putrefaction wrote: »

I don't understand these people.

Which people?

paddyrg

Actually let's look at how any regulation could work - kick around a few ideas, see if there is any merit?

My starter for 10...

Fixed fees not to exceed 10% of the principal value
Interest rate on the loan not to exceed 1% compounded daily
Terms not to exceed 30 days
Late payment charges limited to 5% of the principal value per month (same interest rate)
PDL loans must be registered with a credit agency so you can't have more than one at any time (ie you can't borrow from lender A to pay off lender

There is still plenty of space for profit in that lot, but the intention is to try to stop loans getting out of control and to prevent them getting too cyclic/escalating. With that model, a PDL company could in fact charge £145 for a 30-day £100 loan (inc fees), £196 if it rolled to 60 days (inc fees) - but if not repaid it doesn't spin madly out of control with multiple lenders.

Or maybe that maximum daily interest rate is too high (but hey, leave space for competition) and it should be limited to 0.75%/day (£135 for 30d incl fees, £171 if it rolled to 60d).

Any thoughts?