Payday Loans

littleowl

I have a friend who has taken out a Payday loan. I am absolutely horrified because she received only around £420 of the £500 she borrowed and if she does not pay back before the due date has to pay around 14% and the loan carries over so she will still owe the original £500.

This is an horrendous rate of interest. Can it be right? Does anyone have experience of these apparently modern loan sharks?

inmypocketnottheirs

Well, if she needs the money and it saves her for example £35 a cheque on bank charges where else could she go?

Payday loans are only secured by a cheque and guarantee card, and unfortunately sometimes for some people they have nowhere else to go. I know, I have been there in the past. If it wasn't for this facility I can tell you, sometimes there would not have been any food on the table.

Used carefully, it can be a saviour, but discipline is paramount. Hopefully your friend will be able to repay quickly and not incur too many charges.

The question should not be about the interest, but where else can money be made available under pressing circumstances.

littleowl

inmypocketnottheirs

Thanks for your reply. Unfortunately my friend needed to borrow to pay her rent - she is unemployed. She has not been able to repay the loan so far and has already paid £180 to the company. She will have to pay another £70 next Monday because she cannot redeem the loan and the cheques she has deposited with the company.

What seems crazy to me is that she borrowed to pay rent and yet has paid this company the equivalent of three weeks rent already! All because her claim for housing benefit is taking a long time to process. She is actively seeking work and having to find money for transport costs for job interviews etc.

I do realize that these companies offer a lifeline to people in her position and yet, in the end, she is will be very much worse off.

welf_man

If her HB claim has still not been assessed, she should ask for a "payment on account", and explain her financial situation to the Council - there may be a housing adviser who will talk to her landlord/lady.

I have also used these loans - in fact I have one now - but have always received the full amount. The interest/administration charge is fixed, and the loan can be rolled over to the next (monthly) payday if necessary, in which case only the interest/admin fee is payable, and a further charge is added on when the capital is repaid.

It does sound as though your friend has used something very different to this, and I'd certainly steer clear in future!

Mel xxx.

littleowl

Yes - fortunately her HB has now come through and I think she realises that this type of loan can be so costly that it is not worth it.

I do feel angry though that, although she explained the circumstances to the HB people, all they did was shrug and say there was nothing they could do and the application would have to take its course. Sadly it seems that there are people working in the council who really don't care and positively enjoy wielding a little power.

inmypocketnottheirs

littleowl wrote: »

Sadly it seems that there are people working in the council who really don't care and positively enjoy wielding a little power.

Yup. Inland Revenue, Traffic Wardens et al.

bathgatebuyer

Is it worth complaining to her Councillor or MP? I know that my claim for JSA was help up a few years ago by 'lost post' they said, and I ended up spending the first 6 weeks of my unemployment living off fresh air because of it and racking up charges, etc. I was asked to prove the losses I incurred as a result of this and got some of it back.

littleowl

bathgatebuyer wrote: »

Is it worth complaining to her Councillor or MP? I know that my claim for JSA was help up a few years ago by 'lost post' they said, and I ended up spending the first 6 weeks of my unemployment living off fresh air because of it and racking up charges, etc. I was asked to prove the losses I incurred as a result of this and got some of it back.

That's a good idea - I shall suggest it.

Lostinfinance

Hi everyone, i'm really here for any advice people can give me, I recently took out a payday loan which is due for repayment at the end of this month. Unfortunately i am now facing the possibility of bot having the funds to pay it back. So far the company is being not to helpful as i can't remember my mobile number for security purposes as i have now diconnected this to due to my finance circumstances. I'm really tempted to just not pay them, but i'm worried about the implication. Any help would be appriciated.

Dylanwing

I have dealt with the Money Shop debt recovery area (When a Company employee fraudlently used a cheque) and they are 'robust and effective'. Any delay will incur another fee, and I am pretty sure that they are not particularly open to negotiation. If it's any help, the Money Shop 'only' charge £13 per £100 per Month, so if there is one near you that may be cheaper, but only if you have a proper plan to actually repay the debt.
OP - £16 per £100 is on the cheaper side of these types of loans. Expensive, but only designed as a short-term measure.