What's the point in payday loans?

viclspence

I have taken out wonga loans on more than one occasion, and i'm not ashamed to say it. I earn a good wage (25k) but can not get any sort of credit due to my husband being made redundant and us defaulting on our payments (to be fair I wasn't on 25k at that point). Due to ill health my husband has been in and out of work for the last few years since the point of being made redundant, earning very little money, so all bills go out of my account and my wage covers this with about £200 per month to pay for fuel, food, gas and electric. Funnily enough £200 doesn't feed a family of four. When hubby wasn't working we would take out a Wonga loan on a regular basis, it tided us over and saved us, our house, and to Joe Public it didn't look like anything was wrong. I have nobody who would lend me money from friends/family.

HappyMJ

Weird_Nev wrote: »

Imagine that:
You have zero money in the bank. Zero. No overdraft facility.
You do not get paid for 6 days.
You have a tub of margarine and a pint of milk in the the fridge, that's all.
You need to pay the child minder so you can get to work,
You need £20 to feed yourself and the child.
You cannot get a credit card.
You have nothing non-essential worth pawning.
Your family and friends are in a similar position, so can't (or won't) lend to you.

It will cost you £70 to get to pay day.

What do you do?
Go hungry?
Let your child go hungry?
Beg?
Ask for a pay advance and so admit to your employer you're in dire straights?

Or do you get a pay day loan?

This is a line of credit that is not in the armory of most people, because most people do not find themselves in the situation described above. But some people do, and I do think there is a valid argument that the managed and regulated payday lenders keep people out of the clutches of the doorstep loan sharks. Remember, credit cards and loans are not available to many people and are not really appropriate to cover short term funding gaps. Why get a 6 month loan to cover 1 weeks worth of expenses? That could actually work out more expensive - £100 at 20% APR over 26 weeks versus £100 at 200% APR over 1 week.

I agree there are probably better solutions: A crisis loan from the council, seeking out a friend who can help, approaching an employer. However, pride keeps many from seeking these solutions and may push them towards Cash-loans-fast-4-u.con.

As an example, my wife is a high earner by most standards, but she cannot get a credit card. The only credit she has ever had is a phone contract and a mortgage. Go figure. If she found herself in a dire situation, how would she obtain money fast?

I could never imagine being in a job and being in that situation. Food is priority number 1 before the rent....the landlord can wait. My child's stomach cannot wait so whenever I am paid I buy enough food to last until the next pay day. If this is a first job after coming off fortnightly benefits then I have no problem at all asking the employer for an advance before the first monthly pay day.

The only time I would have considered a payday loan is when my pet broke her leg and required veterinary attention costing £750. However, after speaking with the vet they allow payments in instalments which is much cheaper than payday loans. The other option was to euthanize her which would have only cost £50 including the consultation fee. Anyway, I found the money and she's fine now but lost her ability to jump.

viclspence

HappyMJ wrote: »

I have no problem at all asking the employer for an advance before the first monthly pay day.

I personally wouldn't ever be able to get an advance from my employer, they simply don't do them. It's a multinational company with very strict payroll system.

marilyna

viclspence wrote: »

I personally wouldn't ever be able to get an advance from my employer, they simply don't do them. It's a multinational company with very strict payroll system.

I didn't think I could ask for an advance from my employer either, they are a huge company too. I would feel embarassed asking for it, and getting turned down, Payday loans serve their purpose, and I think should be used if you are really desperate.However if you have any other options, I would advise against a Payday loan. They are better than doorstep lenders/loansharks.

Prothet_of_Doom

worried48 wrote: »

In my case the reasons were both the same, bailing out my husband's business.

We are self-employed and one of the difficulties with that is that there is a level of unpredictability that makes budgeting extremely difficult

Would becoming a ltd company help you? For a start Limited Liability, and secondly better from a tax point of view.

Or just making sure you have a separate business account, and start to grow what I think they call "working capital" that is a bit of a buffer.

Dabooka

They'll always be a need, although what individuals constitute as 'need' is the questions. I recall seeing an acquaintance and her pal leave one of these Moneyshop type places one day when I was on the bus, yet 15 minutes later they walked into the same bar as me and bought a bottle of wine. It actually turned into a good session, but I couldn't work out why on earth anyone would cash a cheque to fund a night out.....

worried48

Prothet_of_Doom wrote: »

Would becoming a ltd company help you? For a start Limited Liability, and secondly better from a tax point of view.

Or just making sure you have a separate business account, and start to grow what I think they call "working capital" that is a bit of a buffer.

I don't know, but in any case there's no way to do it right now - husband has recently gone down with dementia and the urgent need is to get the business out of his name and into mine asap before thingsa get really difficult. But of course he is in denial about what is happening to him.

We do have a separate business account but that doesn't help.

[Deleted User]

But the people now applying for these loans, much surely have the latest technology? or planning days ahead for trouble?


I say this, quite bizarrly as I found what I think I helpful post on I normally end up in :eek:;)) que a week ago ironic just days to payday, I overfill my tank at a remote petrol station, I thought there was enough to cover this lets say my mobile phone which only texts it definately doesn't sing and dance! lost it's signal and I was left swallowing my pride doing the ringaround rest assured the garage did let me make an many calls as needed none of which included trying to obtain a payday loan - and I ain't got the best circumstances but I SURVIVED

Of course I agree with a lot posted, heavens above I remember replying to a same day text message 2 years ago when in the absolute thick of it when I found myself with no bus fair home, no questions asked, natually a request for £200 turned into £400 by the time it showed and already into an overdrawn account..., boy I only wished I had swalled my pride then and had no signal that time, makes you think ah?

Fortunately there is more then 1 garage so I think the only person I lost 'any' shame with is the person that answered my SOS call - their words I rather U asked then turn to payday loans, no interest applied

chrisuren

If you've been told you need to pay x amount of pounds or they'll take your stuff.