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MSE News: Sheen to tackle high cost lenders

Hollywood actor Michael Sheen has launched a new campaign to tackle high cost credit and provide "fairer" alternatives for those who use payday lenders and rent-to-own firms...
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'Actor Michael Sheen to take on high cost lenders'
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  • jamesdjamesd Forumite
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    If someone was to set up a group that reliably lent money at returns after bad debt no lower than the 12%+ that I expect from peer to peer lending I'd be happy to shift some of my lending in that direction. I expect that costs and bad debt would lead to APRs well over 100% for shorter term loans.
  • He could start by encouraging people to join their local credit union.
  • edited 21 March 2018 at 9:25PM
    sourcratessourcrates Forumite, Ambassador
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    edited 21 March 2018 at 9:25PM
    The whole sub prime credit market wants tearing up and throwing away in my opinion.

    The companies that operate in this sector are simply out to make money from the most vulnerable in society, if you cannot access funds through mainstream lending, then you are left with little choice of where to go, for the home, some will say save up and buy second hand, but a lot of these people have nothing to save, which is why £3 a week seems so tempting, until you see the 99.9% interest that is added, there are even worse rates for payday loans.

    There is a massive gap between the haves and the have nots in this country, and a lack of fair lending solutions is just one of many social problems today, zero hours contracts, minimum wage jobs, sky high rents, high cost of living, lack of full time jobs available, benefit cuts, the list is endless.

    I applaud Mr sheen, no pun intended, for raising awareness of this problem, but the whole system of what we pay, essentially from the roof over our heads, to the cost of the food we eat in this country today needs tackling at grass roots level, because everyone seems to be out to make money, and as usual, it is the least able to pay in society that end up getting screwed.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected] All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.
  • enthusiasticsaverenthusiasticsaver Forumite, Ambassador
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    I cannot understand why these sub prime lenders are allowed to advertise on TV. You don't see adverts for alcohol or cigarettes so why are these sharks allowed to advertise their loans? It normalises payday loans and makes people who are in a financial hole think it is ok to take one of these loans as they pass advertising standards.

    We need more credit unions and we need a system where low income families can access some sort of credit for essentials only. There is a massive gap between the haves and have nots but sometimes people have to take responsibility for their own spending and financial decisions. The interest rates are displayed fairly prominently but people still take them out. Either they don't understand how interest works or the short term need for the money outweighs the long term thinking through of how much their £100 loan will cost them.

    We need better financial education in this country and a massive shift in thinking so those who cannot afford high end mobile phones, cigarettes and alcohol, holidays and takeaways every week don't use their money on these leaving them with nothing to pay bills, rent or food.

    We need tighter lending controls so someone on a £12k income cannot get £20k of credit limits or unsecured loans so when they default on these as they inevitably will their only option is to go to the subprime lenders.

    We need a return to saving and even low income people can do this if they managed their money better and did not take out credit. Borrowing on credit is not for people who don't have median incomes. It just leads to more misery.

    I agree with Michael Sheens initiative and fairer alternatives to payday loans are needed.
    Link to soa: https://www.lemonfool.co.uk/financecalculators/soa.php
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected] All views are my own and not the official line of MoneySavingExpert.
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  • Jamesd
    My first post - sorry if I've misunderstood.
    Are you saying you get 12% from peer to peer lending ?
    MSE talks of around 3.5 %
    Thanks.
  • edited 24 March 2018 at 4:50AM
    jamesdjamesd Forumite
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    edited 24 March 2018 at 4:50AM
    JackieW59 wrote: »
    Jamesd ... My first post - sorry if I've misunderstood.
    Are you saying you get 12% from peer to peer lending ?
    MSE talks of around 3.5 %
    There are many P2P firms. The MSE article happens to mention some of the lower paying ones that have been around longest. I expect that most people would be happier with the sort of mixture in my post and around 7% expected than what I do. There's lots of choices so each person can pick the blend that they are comfortable with. Don't go highly concentrated in just the higher rates, a mixture of P2P firms and loans is the vital key to risk management in what is still quite a new area.

    If you want an easy life avoid property development loans. They are renowned for taking longer than expected and poor recovery rates if something goes bad part way through.

    I mentioned 12% in my post in part because the borrower groups involved are likely to lead to 90%+ of loans defaulting in some way and payment arrangements, IVAs and such causing it to take five to ten years from the original loan term before you know whether you've even broken even. It'd be a social good but not one for the faint hearted. More like higher risk lending than any I'd normally do and worthwhile only for the social good. There is outright extortionate lending out there but the costs and risks are very high even with far lower targets.
  • So are you yielding 12% then?
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