'Best-buy payday loans?' blog discussion

Avocado

jamesd wrote: »

This is where payday loans are particularly useful. They can provide people with no other or no better resources a way to handle the unexpected events. Get rid of payday loans and they are left more vulnerable because a useful option that could have let them deal with a situation is gone.

Or... People could join a credit union, pare back their expenses, sell or pawn something, save in advance... Y'know, living within their means type of stuff.

You didn't read my post. Nowhere do I make a case for getting rid of them. I make a case for Martin Lewis not endorsing them and not recommending them, not even if presented as the lesser of the evils on offer.

Martin Lewis made his name on TV going round to financially-stressed peoples houses, rifling through heaps of gas bills and credit card statements, tapping at a calculator then telling them where they were going wrong. I remember footage of ML going round a supermarket with a family getting them to calculate the cost per kilo of branded and supermarket breakfast cereals (might have been Shreddies). I also remember him talking to an older man over a kitchen table about how using a debit card for everything isn't always the way to go and finding enough money so the man could get a caravan (or was it a Rover? Anyway it was an old-man stereotype and it had wheels).

ML then developed this site to be full of tools to help with that overall goal living as well as possible (and probably better than you used to) within your means. Tools like the telephone call cost checker, the comparative of ISA's, the "don't panic" video and links to reliable debt help or the best buy sub-£300 laptops all make a genuine difference to peoples ability to live as well as possible within their means.

Payday loans aren't a way to live in a financially sustainable manner, they are a massive and unknowable gamble that the crisis you have today will not be followed by any more crises before your wages come in. People can't know that. They don't know that. People feel desperate and panicked and PDL's are more than happy to be the smiling face of salvation, with few hoops to jump through... The truth about them is they are ruthless companies, economical with the truth wherever possible, who will engage in illegal or at least very naughty practices like making multiple digs at someone's bank account or taking money needed for food. They are hard to negotiate with if someone falls into difficulties and the whole business model doesn't even work unless some people DO go into difficulties. Payday loans only work if they are screwing someone over. Who? Consumers.

Isn't MSE's stated purpose "consumer revenge"? That couldn't be more different from bending over and taking it! If ML wants to make some sort of impact then he would better serve himself (and any number of the public) by making a page about possible alternatives to PDLs and why you should avoid them.

jamesd

Avocado, for those who have prepared and have the means (emotional, educational and financial) to prepare I agree that the means you have described may be better.

I disagree with your characterisation of payday lenders as a whole, though would agree with it for some. Martin and MSE can be useful in helping to identify those who do act in a responsible way.

I do not agree that payday loan users are normally panicked and desperate, though some will be. It's simply a choice given the options available to them that appears reasonable at the time.

It seems that what Martin has in mind for his article will help to improve awareness of the other options available, improve loan selection decision-making and improve the selection of payday lenders when those are the best of the available alternatives. Those are useful roles for a guide here and should improve the outcomes for those who are considering using a payday lender.

That's likely to end up doing much of what you're after with your "a page about possible alternatives to PDLs and why you should avoid them" thought, but doing it with easy to follow links and guidance that will help people to use those alternatives before getting to the point of selecting a payday lender. Practical self-help, not just don't.

MSE no longer has consumer revenge as such a prominent item, replacing it instead with "Cutting your costs, fighting your corner". That is a better reflection of what Martin and the site do these days, having broadened coverage and advocacy work as revenue has permitted Martin to follow his evolving interests.

Watching what he gets up to it's clear that Martin is willing to tackle tough subjects and puts considerable thought into what is appropriate for coverage and how to to it both properly - ethically - and well. While I don't blindly trust anyone to cover anything perfectly, Martin and his team are likely to do it better than most.

What I suggest you consider doing is providing feedback on the page when it's been done and when it's possible for you to raise more specific objections to anything that you believe to be especially problematic. You may end up simply surprised at how well Martin and his team cover the area.

madmuppet5

If you had an overdraft of say £100 with a bank and was getting charged £5 a day it would actually be cheaper to clear it with a pay day loan. Overdraft fees.....Grrrr:mad:

JimmyTheWig

tagq2 wrote: »

Also suggesting that the "rank by rate" approach of some MSE articles is a bit too simplistic. I know it is difficult to rank customer service.

Which is why I suggested they should use alphabetical order here.

mcdonaghm

Martin,
I agree with your argument for including the pay day loans. I can see that in a very very small percentage of cases they are the right choice. I trust you to include the better options and all the potential pitfalls.

Mara69

As one who has used PayDay loans (once) I think they should be included. There are various reasons:

• People will always use them - desperate times call for desperate measures. If there is a guide in place, then at least people will be able to make an informed decision rather than the have to read the slightly hysterical posts that other's write on MSE.
• They are better than back street lenders - at least they won't break your legs if you fail to pay.
• People will always get into debt and get credit that they cannot afford - no matter how well informed they are. People on MSE write that they have got into terrible trouble with payday loans but as far as I can tell that is from poor planning and even worse budgeting. Don't get a payday loan if you can't afford to pay it back when you say you will. Take some responsibilty.
• Payday loans are open and honest about the service they provide. Yes, the APR is astronomical but it is supposed to be a veruy short term loan - not taken over a year.
• At least, unlike Provident, you don't have someone knocking on your door asking for payment week in, week out. I found Provident were always very keen to have you extend your loan when it was coming to an end. Too tempting for someone with a low budget.

I used Wonga and I thought they were excellent. I was well informed and they were polite and helpful. I knew exactly what I was borrowing, how long for and how much it would cost me. I paid the loan back (via my bank account) and they sent a lovely text to say thanks. Everyone was happy.

To my mind, there is little difference between a pawnbroker and a payday loan lender. They both do exactly what they say on the tin and as long as you are sensible, explore your options carefully and are aware of the ramifications of not paying then they are a great way of borrowing money.

Sadly, there will always be some that will get into difficulties with payday loans - you can't legislate for those that will always, one way or another, get into difficulties with money. At least if MSE has given an honest and clear guide a few more people might be educated on payday loans.

Seldom_Seen_Kid

I don't think they should be included on the website. I think that people don't always read the detail and might not heed any warnings, and take their inclusion on the site as a recommendation.

I know Martin always says that just because something is listed on his site doesn't mean you shouldn't do your own research, but he's such a trusted figure that if these companies appear on his site, it might be a subtle/subliminal reassurance to people that it's not a bad idea to use payday loans.

Paulgonnabedebtfree

PAYDAYLOAN wrote: »

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.

:rotfl::rotfl:
Ha ha. Very funny. At least I hope it's a joke post .
Well at least all the debt can be scrubbed due to age.

Paulgonnabedebtfree

I think payday loan providers should be included - with clear wording that borrowing in such a manner could be a serious problem if not managed properly.
I have never used such a facility myself but if all other credit lines were withdrawn from me, I wouldn't rule it out in an emergency.
If I needed say, £400 to keep my van on the road, I could earn that in a couple of days if I worked hard enough. Far better to pay extortionate interest for a few days than be unable to work. Ideally I should have a bigger cushion being self-employed but paying down my current debts is still gobbling up more resources than I'm happy with. Although the trend is that my debts are reducing, occasionally I need a van repair or new tools and have to increase my debt load over a one or two month period. Without a credit card, payday loan would fill the gap as a short term patch.

VoucherMan

I had planned to say yes -include them if only to make people aware of the fees, and the alternatives to doorstep loan sharks (legal or otherwise).

But reading some of the replies along with MSE Wendy and Alana’s view I have to agree, the fact that you would be naming these companies, even with a big cautionary notice on the page, would likely be taken as an endorsement by many of those likely to use them.

Even MoneySupemarket doesn't offer a full comparison service, although they do list prices from half a dozen or so sponsored products.

Certainly discuss them and, if possible, name and shame some of the worst that people should avoid.

So as far as comparing actual companies I'd say NO. I think you'd be helping more people into unmanageable debt than out of it.




On a lighter note if anyone is receiving unwanted loan offers or credit card invitations I found a seemingly effective way of stopping them.

When I moved house about 5 years ago I was plagued with offers from Provident and high interest credit cards. The previous owner was presumably a favoured customer! After unsuccessful 'return to sender' and registering with the MPS attempts I tried adding a note to their application forms along the lines of
'I don't deal with loan sharks. Please don't bother contacting me again until
(a) you can beat my existing credit card interest rate (MBNA were offering 0% APR with no transfer fee back then)
or (b) hell freezes over.

and sending to them in their freepost envelopes

Strangely enough I haven't heard from any of them since.