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12 month loans

Hi, I notice there are more and more companies offering 12 month loans at very high interest with no credit check. If you search google for 12 month loans it goes on and on. For example pounds to pocket borrow £1000 repay £1868.

I think this will overtake payday loans as the no 1 legalized loan shark.

Please people stay clear

Comments

  • Eonel
    Eonel Posts: 451 Forumite
    Loans without credit checks are Guarantor Loans. The lender doesn't care about your credit record, but will credit check your Guarantor.

    It is sound advice to steer well clear of these loans.

    They exploit people who are financially naive. The Guarantor should borrow the money in their own name, at a much cheaper rate, and give you the cash.

    Guarantors feel protected that it is not "their" loan - but in reality it is entirely their loan that will charge way over the odds.
  • Amigo loans ring a bell here, I thought it was a joke for something else when I first saw the advert.
  • They price for the risk.

    They are expensive due to the high likelihood of default. However, the higher cost makes the person more likely to default so it does seem a little bit of a perverse balancing act.
    Thinking critically since 1996....
  • Eonel
    Eonel Posts: 451 Forumite
    They price for the risk

    In many cases they do not & that is what makes the product unfair.

    The loan is effectively owned by the guarantor - who with a good credit record could borrow the money cheaper on their own account.

    They price for the naivety of the guarantor.
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