'Best-buy payday loans?' blog discussion 24 November 2011 at 6:49PM edited 25 November 2011 at 11:52AM in Martin's blogs & appearances & MoneySavingExpert in the news 35 replies 11.8K views

Former_MSE_Lee

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Read Martin's "Best-buy payday loans?" Blog.

Please click 'post reply' to discuss below.

Millie_Millsters

I say include them, then you can get all the warnings in. Otherwise, where do you draw the line at not mentioning companies/industries that you disapprove of?

2sides2everystory

No ... and if that isn't long enough ... No

gailey_2

I have to say from experience they have their place.

as bank wont extend overdraft even short term
we have no savings
bank charges so high 35quid per transaction.

I think as you dont borrow more than you can pay back
that you not locked in a cycle we maybe done it 3-4times this year not every month.
often for us its cashflow hubby has decent sized wage its just of car/appliance goes wrong ect.

last time used quid quid and went through quidco for cashback.
sometimes they send discount codes.

Dont think they any worse than littlewoods with their 44%interest rate telling kids santa doesnt exist on their xmas ads and encouraging people to get into huge debt buying extravagent gifts.

dacman

I think that you should include a guide to these payday loans. Although I'm fortunate enough to have never had to use them myself I can see that there are circumstances where a short term loan could genuinely help somebody out.

I'd argue that the real problem is a lack of education of what taking out a short term loan could mean to someone. Martin has been vocal in lobbying for compulsory financial education in schools and I don't see why that same sentiment shouldn't extend to the wider populace. The real danger in these types of loans is surely due to a lack of understanding of them and by adding an MSE guide to them then Martin is helping educate which must be a good thing.

I'm sure that any guide would come with warnings and alternatives to using them but for situations where they may be the only option it is foolish to bury your head in the sand and not advise people on whatever is the best of a bad bunch. As an additional section, maybe a couple of real-life case studies of how to use pay day loans efficiently and safety and, more importantly, how NOT to use them could be included with the guide.

antonia1

I vote to include them. I always understood that this site is about the best ways to save money. Like it or not, these companies MAY be the best option for some people. Even if they are not the best option, they are an option, and by giving people the full facts you empower them to make their own decisions for their financial future. I really believe that you can educate people with all the facts to make their own decisions, but you really can't start making decisions for them.

JimmyTheWig

Would it be possible to do it without having any sort of "League Table"?
E.g. if it was an alphabetic list of the big players with the relevant info going across the page for each one. Not dissimmilar to what you've got here: http://www.moneysavingexpert.com/news/banking/2010/12/bank-charges-pricier-than-paydayloans.

Then you don't get one company who is the "MSE Best Buy" for PayDay loans.
Maybe you could include some of the alternatives in the table so people could see how using a credit card might be better, etc.

jamesd

Yes, you should include the best or least bad, along with Lenders Compared, which typically offers better deals than even the best payday loans, if there's time to get a loan set up.

The Lenders Compared lenders tend to be cheaper even for short duration loans, since the cost of interest for early loan settlement tends to be less than the fixed fee of a payday lender. And they have the substantial advantage that their interest rates are lower if it does turn into longer term borrowing.

What I'd normally suggest for someone who needs this type of credit is getting a longer term deal via Lenders Compared, then making overpayments as they can afford them. That takes care of both the urgent need and keeping the interest cost to only very expensive rather than extortionate levels while someone recovers their financial situation with less time pressure.

Saying how the payday lenders handle payment issues and detb management arrangements is a very good thing and could significantly help to improve the average experience of borrowers using this form of lending. Noting those which handle this badly would be of particular value, regardless of whether they are a good or bad deal otherwise.

tagq2

How about a 'best-buy loan sharks'? I mean, like drugs, people are going to use them anyway, so it's best to keep potential customers informed... and to push for threats and beatings to be well-regulated.

MSE already have a habit of ranking on figures rather than on facts: e.g. bank X may get ranked higher for some high-paying bond even though actually signing up might involve such hassle and delay that you've lost any bonus over the second best. This doesn't matter too much when you're dealing with saving or with large, long term loans for people who have demonstrated financial stability.

But when you're talking about the kind of person a PDL is targeted at, any comparison is necessarily far more complex. 1000% vs 1200% APR won't matter as much as: what kind of fines if you're a day late? do they make a habit of trying to take payments multiple times, against OFT guidelines? do they ignore what is not in writing?

Anyway, if you're going to go down the route of full, responsible advice, then you need to put PDL at the bottom of the list just before "loan shark". Ask: do you really need it? If it's for an emergency, have you tried a government crisis loan? Otherwise, if it's too small for a high street bank to help you, have you tried a credit union? A government budgeting loan? If it's because you haven't been able to make ends meet, why do you think the solution is short term credit - what are you going to do next month? Create a sufficiently complete "help making ends meet" tool which leads people through the options, not a single page which clueless people will find when they put "which best pay day loan company" in Google.

Discogod

without delving into the pros/cons of it - the only thing wizzing round my mushy head is: how is this different to recommending credit cards or your advice on getting the best mortgage for your situation?

PAYDAYLOAN

I WAS OBTAINING PAYDAY LOANS AT 15! For me it really was like a drug! I am now in default with over 35+ different Payday Lenders and counting (As letters arrive!) and it’s been like this since i was 15 I ran away from home, had no money and a GPRS enabled phone found quickquid entered every detail correct bar my dob entered as 30/11/1980 and was approved despite being 15 borrowed from some other company to pay them back could have been cash genie not sure and the rest is history!. By far the best if you fell in financial crisis for me I believe is Quickquid as they freeze charges as soon as you default meaning the debt stays a relatively low amount Mine went to £490 after a £400 loan. One off the worse I have encounted was 247 Moneybox I think I owe them over £1500 for £300 loan and then they took £20 off for a chaps transfer! There’s a 0% interest offer for your first payday loan with instant loans direct for 8 days. The market is massive I am only 18 now and in over £35000 off debt thanks to payday loans, i know it’s my fault but I had nothing in the first place I was kid still !!!!!!! Every time I saw approved and the money got transferred i got excited! And now i can’t get any more! cant keep to my arrangements! Have 3 CCJS in a 1980 DOB and I was born 1992! and the worst bit about it I cannot get any help because I committed fraud without even knowing it! Cant go bankrupt, cant enter a debt management plan.