MSE News: Payday loan firms claim unfair treatment

hunni1509

Payday Overdraft:
£200.00 Loan May 2011 - £258.39 to be repaid in June 2011
Struggled to pay back made offers woulnt accept it, Been a nightmare and harasment my debt has now gone up to £2638!! In just 11 months, Here is a breakdown of the charges:
£35.00 per default
£25.00 non payment
£1000.00 in contact charges (which of course I didnt asked for the emails, the texts at 10pm at night and the texts at 7am in the morning, and the nasty emails but hey ho)
£24.00 monitoring account Fee £4.00 per month
£400.00 Court admin charges
£816.48 Contractual interest 1.3% per day!!!
£80.00 Court Fee

Total Debt £2638.00 so basicallyover 11 months I have incurred £239.00 per month in charges!

hunni1509

Payday Overdraft:
£200.00 Loan May 2011 - £258.39 to be repaid in June 2011
Struggled to pay back made offers woulnt accept it, Been a nightmare and harasment my debt has now gone up to £2638!! In just 11 months, Here is a breakdown of the charges:
£35.00 per default
£25.00 non payment
£1000.00 in contact charges (which of course I didnt asked for the emails, the texts at 10pm at night and the texts at 7am in the morning, and the nasty emails but hey ho)
£24.00 monitoring account Fee £4.00 per month
£400.00 Court admin charges
£816.48 Contractual interest1.3% per day!!!
£80.00 Court Fee

Total Debt £2638.00 so basicallyover 11 months I have incurred £239.00 per month in charges!

nottoolate

Pay Day Loans Company Wonga To Target Small Businesses

jamesd

That seems like a good move for developing the Wonga business. And a pretty sorry indictment of the service provided by banks to businesses.

bbfc

hunni1509 wrote: »

Payday Overdraft:
£200.00 Loan May 2011 - £258.39 to be repaid in June 2011
Struggled to pay back made offers woulnt accept it, Been a nightmare and harasment my debt has now gone up to £2638!! In just 11 months, Here is a breakdown of the charges:
£35.00 per default
£25.00 non payment
£1000.00 in contact charges (which of course I didnt asked for the emails, the texts at 10pm at night and the texts at 7am in the morning, and the nasty emails but hey ho)
£24.00 monitoring account Fee £4.00 per month
£400.00 Court admin charges
£816.48 Contractual interest 1.3% per day!!!
£80.00 Court Fee

Total Debt £2638.00 so basicallyover 11 months I have incurred £239.00 per month in charges!

And the moral of the story is? Don't take out a loan if you have any doubts about paying it back.

bbfc

adamc260 wrote: »

And yet how many threads appear on sites like this daily?

The threads are from people who don't pay them back and call these PDL companies all the names under the sun.

I've had PDL's in the past, paid them back on time and haven't had ANY issues at all.

jon1965

Do people really take them out knowing that they can't pay them back.
In my opinion most people either overextend themselves because of eith a false optimism or poor money skills or are desparate and think it will work out.
Yes PDL's do provide a service, yet what is unacceptable is the way they treat people who are late/miss a payment. They add stupid charges and menace and threaten people.
I think it shows how bad it is when the OFT launch an investigation , they are hardly the most proactive organisation now are they

tell_it_how_it_is

I think the main problem is with the scale the debt can escalate should someone have trouble paying back the agreed amount.

The example above is perfect. I don't care how good or bad the borrower is, with money or as a person, and whether they have done right or wrong in struggling to or avoiding paying it back - they simply do not deserve to have a £200 loan ramped up to £2,638. £1,000 in 'contact' charges?! It is not fair in the slightest, and in fact it is complete insanity!

I think the interest rates and charges are fair enough over the agreed 2-4 weeks, and work well enough, but there really should be some sort of cap so that a debt cannot, say, go over triple the agreed amount. And if it was still not paid after that, no more than a nominal amount should be allowed to be added on periodically.

jon1965

jamesd wrote: »

Is this story really by the Press Association? Their version on Google News is substantially different. Specifically, they do not make the claim that borrowers "are encouraged to pay late by lenders, as often happens"

It seems far more likely that customers are offered the chance to extend or replace the loan rather than pay late and incur whatever penalties exist for that, along with a potential late payment marker on their credit records.

It's also worth noting that the payday customer survey was of the customers of just one payday lender. Undoubtedly not one of the worst participants in the market.

I do not think the stories are substantially different. But it is a fact that some payday lenders do not take back the full payments on payday, just the interest and put the onus on the borrower to call ip and pay the rest. Now that is just wrong.

And then, although they say they are responsible lenders they do not do the full credit checks, how responsible is that?

Once, for whatever reason someone misses a payment the tactics are beyond belief, multiple phone calls, txtx, emails on a daily basis, refusal of genuine offers of repayment increased charges. They break so any OFT guidelines it is hard to keep count.
Finally, by the nature of the loans, most of the people who use them are those least able to deal with these companies , could be lack of education, lack of support, lack of knowledge, mental illnes etc etc

jamesd

There's a huge difference between encouraging someone to pay late, which can generate a late payment mark on their credit record and make it harder to get mainstream credit, and having a loan rollover facility that can be used if the borrower wants to use it.

If a lender was often encouraging borrowers to pay late then that lender is one I am unlikely to think should have a consumer credit license. The harm that can be done by late payment markers is too great to accept as a routine business practice.

Not doing a full credit check seems like sensible business practice for some loan amounts, not sensible practice for others. There's a limit to how much cost overhead it's sensible to add to a £100 loan taken out for a week. Doing a basic check at a single credit reference agency might be inexpensive enough to be worthwhile for the lender and customer. For such small amounts and such short terms the initial costs are a huge part of the cost of credit.

I agree that some payday lenders clearly do act in unreasonable and irresponsible ways.