MSE News: Stella Creasy: Action needed NOW on payday lenders

Rafter

callum9999 wrote: »

I'm always torn on this issue. What exactly are the people who genuinely need the loan, but because of the capped interest etc. can't now get it, meant to do? It seems slightly unfair to penalise them because of other people being irresponsible (you can't lend irresponsibly if someone isn't trying to borrow irresponsibly...).

While this has reached the point where something really should be done, "protecting" the people who wreck their own finances always comes to the detriment of someone else, so you need to be careful how it's done. Saying that, the suggestions given in the first post seem pretty reasonable to me (except for the last point - it's both unfair, and quite possibly illegal, to force banks to give overdrafts to everyone).

Callum,

I wasn't suggesting that banks should be forced to offer a c. £200 emergency buffer to all. But to those customers to whom they would historically have offered a unauthorised overdraft, they should as part of their privileged position as guardians of the financial system offer access to very short term funds before a customer has to go to either a loan shark, government or charity for an emergency hand out.

R.

UsetheFORCE

Apples2 wrote: »

So if you agree to borrow £100 repaying £125 a couple of weeks later, you may as well not bother repaying anything until you get another job, win the lottery or whatever safe in the knowledge your balance will remain static?

Did I write that? Clearly your credit file will be damaged so if you don't repay and so logically anyone else wouldn't touch you with a bargepole in the next few years. If you don't even repay £100 as agreed then you don't deserve to be offered credit!

UsetheFORCE

ILW wrote: »

That really makes no sense.
In effect, the longer someone strings out repaying, the cheaper the money would get.
Bear in mind that people who take out payday loans are the ones who cannot get credit from mainstream lenders.

If it clearly recorded that you haven't paid a short term lender back then the reward should be no CREDIT at all for the next few years.

If a company takes the risk and it doesn't pay off then tough! I will leave you all to discuss it, I really do think some people have too much sympathy for these companies.

Mainstream loan companies have defaulting customers but don't resort to charging these ridiculous rates once you have defaulted! Don't have a term if you effectively want to have an open ended term anyway!!!

Apples2

UsetheFORCE wrote: »

Did I write that? Clearly your credit file will be damaged so if you are so logically anyone else wouldn't touch you with a bargepole in the next few years.

Which is why these people approached Payday Lenders in the first place. That horse has already bolted.

Who on Earth would take out a payday loan if there were other options (aside from those grabbing the cashback recently)?

Apples2

UsetheFORCE wrote: »

Don't have a term if you effectively want to have an open ended term anyway!!!

Are we going around in circles here?

The lender DID have a term and was prepared to stick to it. It was the BORROWER who decided he was going to make it an open ended term.

Wywth

We must be vigilant in keeping up the fight to end legal loan sharking in 2013.

Exactly - they are killing the illegal loan shark industry that so many would otherwise be forced to rely on :cool:

DC is correct - that lot should not be allowed to govern this country, not with their present incoherent policies.

shadowspy24

If people take out a payday loan to pay a bill, surely it would be cheaper to not pay the bill for a month until you get the money and incur their late payment fee which would probably be a pittance compared to the payday company's interest rate. Hell, you could put off paying the bill for a lot longer and incur multiples late payment fees and it would still be cheaper than 1 month of interest from these loan sharks.

callum9999

Rafter wrote: »

Callum,

I wasn't suggesting that banks should be forced to offer a c. £200 emergency buffer to all. But to those customers to whom they would historically have offered a unauthorised overdraft, they should as part of their privileged position as guardians of the financial system offer access to very short term funds before a customer has to go to either a loan shark, government or charity for an emergency hand out.

R.

Oh I see, but is that not exactly how it is already? I thought basic accounts don't let you go overdrawn (unauthorised or not). If you want a £200 buffer and the bank would be willing to give it to you, then get a normal account.

Treadmill

The Barclays reserve facility charge is £22 for 5 days use, so you could potentially be charged £110 for 25 days of being into your reserve by £100, this sort of thing also needs to be looked at, advice to anyone with Barclays. Cancel the reserve facility.

All this talk of 'contracts' like they are the holy grail is silly. Just because something is written in a contract that doesn't automatically make it fair or legal, hence every Mis selling scandal that ever happened.

I personally am looking forward to when another group of sharks, the claim type start claiming back fees for Payday loan defaults and penalty interest on a no win no fee basis as will inevitably happen.

ILW

Treadmill wrote: »

The Barclays reserve facility charge is £22 for 5 days use, so you could potentially be charged £110 for 25 days of being into your reserve by £100, this sort of thing also needs to be looked at, advice to anyone with Barclays. Cancel the reserve facility.

All this talk of 'contracts' like they are the holy grail is silly. Just because something is written in a contract that doesn't automatically make it fair or legal, hence every Mis selling scandal that ever happened.

I personally am looking forward to when another group of sharks, the claim type start claiming back fees for Payday loan defaults and penalty interest on a no win no fee basis as will inevitably happen.

I do not believe PDL companies charge penalty interest. Just the rate agreed when the loan was taken out.
These loans can be OK if used properly.
The idea is that you repay on payday which is not exactly a secret.