Pay Day Lending - is it ever ok?

dantan

I know Pay day lenders get really bad press because of high APRs that go like 3,000% or 4,000%

Lets say there are lenders with 200% APR - are they still frowned upon?

[Deleted User]

It depends on how you're using them. Even 4000% can have its place if it's managed corrrectly.

Peelerfart

The biggest problem is that most posters on here don't manage them correctly.

Mainly because,I think, the fact that you need one at all means that you aint managing

Tixy

It might be ok to use them sometimes.

But its never ok to Spam these forums though.

[Deleted User]

For lower paid workers, pay day lending = misery and should be avoided at all costs (but I know you can never make a person's decision for them)

The damage they can do, is never worth it
Wouldn't surprise me if payday loans companies sold details to supplement their income

Ahhh all credit can be bad I guess it comes down to people's intellegence and risk taking..!

Now I was a dumb bird when I took out my first payday loan - didn't even think if at all, about apr... shuddering and rightly so thinking back about it

throwoff

In my opinion they have their place like almost any legitimate lending does.

However as someone who has been the vicious circle of them for almost a year I would say steer well clear!

opensomehours

You can get yourself in a mess quite quickly. I guy I know took one out in the run up to last Christmas. Pretty much ignored the repayment date then ended up paying a hefty fee on top of the repayment of the loan. A lesson learned.

It does really come down to managing your finances correctly. Avoid getting into a position where you need the loan is the best call.

You hear some stories where younger generations take out the loan for a night out, or to buy clothes.

another_girl

I don't think they would get such a bad press if they were ok - or were helpful to the consumer.

Most of the time they're being marketed to vulnerable people, e.g. people who may be financially excluded from other mainstream lenders, people who may not know of safer options - e.g. credit unions or crisis loans. They've even had advertising critism from trivialising the product they're selling.

Whatever their advertising bumpf says, they're loans targetted to people in difficult situations who are then very susceptible to falling into further difficulties, compounded by the extortionate interest rates being charged - which turn into a nightmare as soon as a loan is rolled over on a payday or another one is taken out.

Just my thoughts though!

opensomehours

another_girl wrote: »

I don't think they would get such a bad press if they were ok - or were helpful to the consumer.

Most of the time they're being marketed to vulnerable people, e.g. people who may be financially excluded from other mainstream lenders, people who may not know of safer options - e.g. credit unions or crisis loans. They've even had advertising critism from trivialising the product they're selling.

Whatever their advertising bumpf says, they're loans targetted to people in difficult situations who are then very susceptible to falling into further difficulties, compounded by the extortionate interest rates being charged - which turn into a nightmare as soon as a loan is rolled over on a payday or another one is taken out.

Just my thoughts though!

yep - thats when it becomes messy. When you take out a loan to cover a loan. Credit unions sound like a good option, although never used them myself. I see more and more of them popping up, so they must be doing something good!

another_girl

Credit unions are aware of the problems, but a lot of people aren't aware of credit unions.

I know of one instance, in my local area, where a credit union actually refinanced someone who'd ended up with like thousands of pounds owed on payday loans.

There are so many other options, but people just don't know about them. I'm sure Martin's got some guides on the site, but some credit unions will even lend money before you save, although if you can save first that's always the ideal - as some do require a savings account before you borrow.

The council also run crisis loans, and there are organisations that can help with emergency home improvement loans - like if you get a burst pipe for example.

There are so many instances of vulnerable people borrowing with a payday lender and then feeling like they have to make those payments BEFORE paying utility bills or council tax, because of the added pressure of this type of lending.

another_girl

Deleted%20User wrote: »

Wouldn't surprise me if payday loans companies sold details to supplement their income

They do.

Check Wonga's privacy policy - although according to Wonga they don't sell on customer details (unlike some other lenders) - but I'm pretty sure they leave it in their terms just in case...