Pay Day Lending - is it ever ok?

endora

Take_it_like_a_man,_sonny wrote: »

Direct Debit due at bank for £20. Borrow £50 for ten days, cost £8.
Direct debit missed at bank, cost £35.

Does not take a cse in maths to work out.

Problem is those who complain about the interest rates are the ones who sit on there silver and do nothing, yet keep those that need the loan in abject poverty.

Banks are not exactly sweet angels, are they? don't get me started on them! :mad: :mad: :mad:
What is it that us who complain about interest rates could do?

martintwin wrote: »

My problem with this whole payday loan debate that we have here in US is that if payday loans could be cheaper they would be. There are no barriers to entry in this sector - in short, there are no holds for competition to work and drive the rates down to its competitive levels. The rates are at their competitive level. Why people keep tripping is because they want cheaper money and that payday loans are expensive and keep them hostage of their own mistakes. I do not see a legit case against payday loans. The only legit reason I can think of is to protect people from their own bad financial decisions. But if that's why we are going to regulate payday loan lenders, then we should limit the number of cigarettes people smoke per day, number of sodas they drink, number of hours they play video games because all these can be considered harmful behaviors.

But PDLs are not even legal in all US states, are they? I believe they are only legal in half the states. That must say something!

KingElvis wrote: »

Yes, but the damage those pay day loans do to your credit history are horrendous...once your dream wedding is over and if you later want a mortgage or a proper loan or credit card these things will come back to haunt you like a dead bat hanging round your neck.

Serious lenders see payday loans as a sign you cannot budget, you cannot live within your means and you're financially baffled.

Sorry but those are the facts.

If you care not for your long term credit history (and six years is a long time if you can't wait a week for a tv set) then I suppose they can be useful.

In most cases, people who resort to PDLs have poor credit histories. Those with good credit can get credit cards, loans and overdrafts from mainstream lenders at much lower rates. For example a friend of mine recently contacted Santander asking for £100 increase to his O/D as his rent was due before he got paid. It was accepted because he's already got an O/D facility and good credit (so far). This would be a case when others with lesser credit records would resort to PDLs.

jon1965 wrote: »

My last comment on this
So the comments that they will damage your chances of getting proper credit are entirely subjective based on opinion and not fact.You admit yoursef that noone knows how lenders decide on risk so you are not in a position to make such a statement.
I am not saying they are not true, just that the phrasing of WILL and not may is wrong.

See above...

Derivative

Freedom of choice - is it ever ok?

KingElvis

^^ fair enough but I wouldn't want one of those babies on my credit history.

jon1965

Thanks Endora but I was talking about the claims by Elvis and Apples that Sal had screwed what may have been a perfectly clear credit history by using a PDL.
I do however agree with you, that most people who take out PDL's have a poor credit history anyway.

Apples2

jon1965 wrote: »

I was talking about the claims by Elvis and Apples that Sal had screwed what may have been a perfectly clear credit history by using a PDL.

We'll never know the answer to that. If Sal does get accepted for credit, would the APR offered be the same as it would have been but for the PDL?
If Sal gets rejected, is it due to the presence of a PDL?

Nobody knows except the lender, if you try to think like them, things become a little clearer.
Imagine it is you lending your money. What type of customer would you lend to?
Would you lend to perfect applicant's, or would you lend the same to anyone, regardles of history, everyone deserves a second, third, fourth chance right?

KingElvis

I would imagine if it goes before an underwriter he will run from the room screaming....payday loans shout "I don't earn enough for my lifestyle" and "I live beyond my means"

That's my opinion, take it or leave it.

endora

KingElvis wrote: »

I would imagine if it goes before an underwriter he will run from the room screaming....payday loans shout "I don't earn enough for my lifestyle" and "I live beyond my means"

That's my opinion, take it or leave it.

Funny how people seem to think so when in fact it's often all the opposite. PDLs are mostly for small(ish) amounts and often used to cover essentials or emergencies (not always but often) while mainstream credit is more often used for 'luxuries' like holidays, eating out/going out, a new gadget, etc. and the amounts involved are much larger, thus you could say most people who use cards and loans do live beyond their means while many PDL users are just struggling.

Of course I'm not privy to the criteria used by lenders when evaluating credit history, in fact, different lenders use different criteria. But I'd say most PDL users have defaults, etc. anyway.

KingElvis

Endora, there have been many threads on here about people using these loans to buy shizzle...nights out, mobile telephones, TV sets, weddings and other rubbish.

If you can't get "proper" credit what other way have these people got to buy such tosh?

Some may be used for emergencies but I would bet the large majority are used for tat of some kind.

endora

Obviously I don't know exactly what people do with the money they borrow and I don't think anyone has that kind of info so impossible to get any stats. But don't people pay for nights out, weddings, gadgets, etc. using credit cards and O/Ds?

iolanthe07

KingElvis wrote: »

Endora, there have been many threads on here about people using these loans to buy shizzle...nights out, mobile telephones, TV sets, weddings and other rubbish.

If you can't get "proper" credit what other way have these people got to buy such tosh?

Some may be used for emergencies but I would bet the large majority are used for tat of some kind.

!!!!!!? I don't think I've ever heard Holy Matrimony described as 'tosh', 'rubbish', 'shizzle' and 'tat' before! Weddings are very important to those of us with traditional views and can hardly be put in the same category as nights out and TVs.

But I do agree that it is much better to save up for a wedding, and there is absolutely nothing wrong with having a modest one. The most fun wedding I ever went to cost less than £500 al lin (in 2004).