MSE News: Government wants more time on payday loan cost cap

jamesd

It's worth remembering that payday loans are cheap compared to bank charges for exceeding limits. They are also useful for those who have little choice.

What can be done without a hard cap is to require preventing borrowers with alternative lender information, like the results of a search on LendersCompared and details of alternative local lenders.

simon_the_poet

jamesd wrote: »

It's worth remembering that payday loans are cheap compared to bank charges for exceeding limits. They are also useful for those who have little choice.

What can be done without a hard cap is to require preventing borrowers with alternative lender information, like the results of a search on LendersCompared and details of alternative local lenders.

HI
These are some of the arguments that are presented, the problem is that most of these loans are taken out by peope who have never had a current account or access to an overdraft, despite what they say they are targeting the lower and finacially excluded members of society.
Look at the targeting of the advetisments on the TV, count how many are placed in day time spots , duing the Jeremy Kyle show and the like(as pointed out in the above parliamentary debate), at times when unemployed people at at home.

I worked for some years as a Credit Union developement worker and agree that there are alternitives but these are not immediately available, the government has just slashed the allocation to the social fund, i would agree that these loans can be useful but they must in my view be regulated, this is the view that has been arrived at after extensive study abroad and i see no reason why the same criterea should not apply here.

Simon

jamesd

Payday lenders are already regulated by the Office of Fair Trading, just like other lending in the course of a business. I've seen here some tales that suggest that some deserve to lose their licenses.

I agree that payday lending is often aimed at those who have less access to normal credit. That's a major part of their value to society. The largest part, IMO.

What is possibly a negative value to society is the level of costs, particularly for loans that are regularly renewed when a switch to a doorstep lender or more mainstream credit would be far cheaper, though still expensive. I'd like to see some improvement in this area, with things like mandatory disclosure of local competitors who might offer better rollover deals.

Whether someone has a current account or not, they would also be able to use the mainly doorstep lenders covered by the LendersCompared site. Though it seems common practice to ask for a debit card so it seems clear that in many cases the target audience is those who have a bank account.

I haven't been impressed by my local credit unions. Minimal information about deposit interest rates, even historic dividends, and no convenient way to deposit or withdraw money. I'm well outside the stereotypical credit union demographic, was considering depositing more as an act of charity.

I'd love to see credit unions offering payday lender rescue packages and being featured on LendersCompared. My local ones aren't, even though that's the same market that they are largely aiming for.

simon_the_poet

Yes indeed they ar covered by the CCA, the OFT are also of the opinion that thee agreement need aditional regulation.

Appologies on behalf of the Credit Union movement for failing go impress you.Not sure what you mean by outside the demographic.
You dont need an overdraft facility to have a debit card these days.
I think perhaps if you had seen at first hand the effect of high interest loans you may have a differnt view but as you say they are probably outside your demographic.

For those intersted in the real situation look here

http://www.endlegalloansharks.org.uk/


Simon

joey12321

simon_the_poet wrote: »

Yes indeed they ar covered by the CCA, the OFT are also of the opinion that thee agreement need aditional regulation.

Appologies on behalf of the Credit Union movement for failing go impress you.Not sure what you mean by outside the demographic.
You dont need an overdraft facility to have a debit card these days.
I think perhaps if you had seen at first hand the effect of high interest loans you may have a differnt view but as you say they are probably outside your demographic.

For those intersted in the real situation look here
...


Simon

are the apr on these loans really that high? maybe you should compare it to some other things first. for example; going £200 pound into an unautorised overdraft with Loyds TSB for 10 days would be more than 46MILLION% APR. payday loans are the quickest way to borrow short term and compared to the example i just showed you there pretty cheap too, as long as you pay them back on time like your supposed to. and before you ask im on a low wage and have had payday loans from two different companies, and i payed them back on time LIKE I SHOULD HAVE, and the were a BIG help

iolanthe07

going £200 pound into an unautorised overdraft with Loyds TSB for 10 days would be more than 46MILLION% APR.

The key word here is 'unauthorised'. Unauthorised overdrafts are illegal in many parts of the world and it is not surprising that there are stiff penalties here, where they are legal. Properly authorised overdrafts are much cheaper than payday loans.