Amigo / FLM Loans - Guarantors Please be careful!!

FinanceForEveryone

I just got a pack through the post from Amigo Loans. The pack opens with something that looks like a bank statement with £4,250 Paid In on it, saying ‘Authorised for Payout’ and “BACS Transfer Credit”. Also, on the front page: “I’ve set up an account for and put £4,250 into it. Before I can give you access to this money, you need to find someone to be your guarantor. This person can be anyone you know, as long as they own a property in the UK and have a good credit history.” The loan is charged at 49.9% APR and underwritten by a guarantor that is a homeowner...hang about!!?

I did a bit of research on this offer and the company Amigo loans. Amigo loans (formerly FLM Loans) is part of the Richmond Group and owned by James Benamor in Bournemouth. To my horror in 2008 the BBC did an article on the owner of Amigo Loans and to quote them: "A millionaire from Bournemouth has made a fortune by misleading people over loans, a BBC investigation revealed."
The Mirror also ran an article about him.

At the time they said he was worth around 77million pounds. He’s now in the UK Rich List valued at around £220 million pounds. So he’s still doing loans, but now, is worth about 3 times as much!?

Here’s some more concerning info for the unwary prospective borrower, also receiving these forms from Amigo Loans through the post:

In many posts and statements I have read online, Amigo justify charging almost 50% APR for their loans ranging up to £5,000 by comparing their rates to payday lenders. However, I think this is very misleading as Amigo loans are mid-term loans, 3 to 5 years, so it does not make sense to directly compare the APR with payday loans.

Amigo say they will collect directly from your designated guarantor if any missed payments are made and can even place a second change on the guarantor’s property to recover the debt and on top of this negatively affect the guarantor's credit rating! Why would anyone want to burden a good friend or family member with this kind of risk or potential hassle?

I also read online that these loans therefore carry very low risk to the lender but yet they charge a high apr to the borrower!! I would surmise that Amigo Loans is a particularly lucrative business so in my view by returning your form your just helping them get richer and yourself poorer...personally I'd rather not borrow at all than engage in this kind of thing.

I found on a Love Money article, that deals also with this subject. It basically suggests that if you have to get someone else involved, like a guarantor, you should consider getting an agreement drawn up between you and your guarantor, even getting a solicitor involved is a lot cheaper than paying back at almost 50% APR – it’s better for the borrower and the guarantor.

[Sorry I'm a Newbee so it wouldn't let me insert links to the relevant articles - hopefully this thread will be useful to people in similar boat to me anyway - go easy on me though! :-)]

poppasmurf_bewdley

For FLM Loans read FML Loans, which is what they do.

dealer_wins

Only a fool would be a guarantor on those terms (Or at all!!)

Sadly there are many fools around.

Mara69

Any unsolicited mail I receive through the post goes straight in the bin. If I d consider a loan, I have enough intelligence to carefully do some research before making any applications.

worried48

This won't have been unsolicited.

_Andy_

"just helping them get richer and yourself poorer"...well..yes. Surely the same could be said about any loan provider? That's the point of them being in business.

castortroy28

Agreed... check this below in bold. this is the kinda rubbish i get from them.

Hi Castor,
My name is James Benamor, I started amigo loans because I knew how it felt to be rejected by a bank because of my credit score.
In the last few years it's made me sick seeing people being pushed into taking out ripoff paydays loans and having nowhere else to turn.
I knew it was possible to offer fair loans at a fair rate to good people. People like John from Newcastle who had racked up £2000 in unauthorised overdrafts and payday loans at rip off rates. He couldn't borrow from his bank because of his credit score, but his brother knew he could pay off a reasonable loans and so he agreed to be a guarantor for him on an Amigo Loan. Because his brother trusted him, I knew we could too and we were able to offer him a loan at 100th of the APR he was paying before.
People are starting to take notice too. Last month we lent to our 60,000th customer. We've been working hard to make more money available and this month we've got £5million that we'll be lending to new customers in the next few weeks.
We're taking things back to how banking used to be and fighting back against payday loan sharks but we need your help. borrow from us now - as long as you have a friend of family member who trusts you, we can lend you up to £5000. (Representative 49.9% APR Variable)
If you don't need to borrow right now but you have friends who do, recommend us (as a personal thank you, you'll get up to £500 for every loan taken out!).
We're making fair, flexible loans at an honest rate possible again.
Only together can we make a difference.
James.

FinanceForEveryone

...probably unsolicited too!? "We're taking things back to how banking used to be" - borrowing at almost 50% APR over a 3 to 5 year period on a financial product underwritten by a house-owner, owning a property worth many multiples that of the loan!? That's not how things used to be. I think it's a tragedy that this is what things have become!

_Andy_

Castro - can you edit your post so the hyperlinks are removed? Otherwise you're doing them favours giving them backlinks from a good site
cheers

FinanceForEveryone

Aboslute classic also:

"fighting back against payday loan sharks but we need your help. borrow from us now - as long as you have a friend of family member who trusts you, we can lend you up to £5000. (Representative 49.9% APR Variable)"

Grammer mistake from the owner! I reckon these guys are worse than payday loan sharks as they shirk the risk and responsibility from a borrower, to another party, the guarantor. Plus, the loan is much higher value and longer term than a payday loan so the net amount repaid in interest is much much higher. Now I hate payday lenders, but at least they take on the full risk of the loan themselves!! :mad:

DCFC79

FinanceForEveryone wrote: »

Grammer mistake from the owner! I reckon these guys are worse than payday loan sharks as they shirk the risk and responsibility from a borrower, to another party, the guarantor. Plus, the loan is much higher value and longer term than a payday loan so the net amount repaid in interest is much much higher. Now I hate payday lenders, but at least they take on the full risk of the loan themselves!! :mad:

They dont make the 1 who is the guarantor sign his name on the dotted line, the guarantor is persuaded to sign the contract as they are promised the payments would be kept up to date.

All they are doing is offering a service, no 1 is being forced to get into bed with these guys.

People can do they're own research on whats involved as being a guarantor but I bet some dont bother.