Amigo Loans Irresponsible lending complaints thread

boo_star

Willing2Learn wrote: »

:shocked: :shocked:

I believe your subjectivity leaves us at deadlock.

Objectivity, but I agree we're at an impasse.

glennstar

boo_star wrote: »

There's absolutely no evidence that they're targeting vulnerable people.

Actually, I'm not too sure of that. At the start of this thread (which I might add the Op has been pretty poor at engaging in - not that we need Op to have a good moan but it would be nice if they came back and answered some proper questions) I stated that I could provide a list of tangible issues with Amigo if they wouldn't and one of the items I would put on there is that Amigo are particularly poor (in the poor form sense not the effective sense of the word) with their direct marketing.
They commonly send unsolicited text messages like;

Dear Mark. Your loan application was accepted by Amigo Loans.To received cash today click https://amigo.me/<redacted&gt; & provide a guarantor

and worse still;

Hi James, I've been passed your application for £3000.00, & based on the information you've given we're happy to lend you up to £5000 with a guarantor. We will need to run our checks before we can pay out and make sure you can both afford the repayments. Just go to http://amigo.me/<redacted&gt; to apply. Thanks, Jonathan at Amigo Loans. To stop these messages text STOP.

Whilst on the face of it these messages do not seem problematic (well, actually, on the face of it there is a lot wrong with both messages... but the main point is), they have been sent to people who have consistently failed to get payday loans via payday loan brokers. They appear to be triggered when the broker and/or Amigo know the applicant has repeatedly failed to secure finance elsewhere. Whilst I agree with and support everyone's comments about the interest rate being defined by the risk, I also feel it is wrong of companies like this to break laws and guidelines in order to secure business.

I guess the problem is that, despite the ICO and FCA being aware of this activity no action is taken, leaving the inevitable conclusion that Amigo appear to have arrived at, which is that they can do whatever they like with impunity, leaving me to conclude that there should probably be a page/post each on this forum for the failings of the ICO and FCA to take appropriate action, rather than singling out one business or another in this way.

MEM62

Willing2Learn wrote: »

Personally, I do not think 50% is outrageous. Their target market are for borrowers with a poor credit history. Borrowers who are unable to get a loan without a guarantor. The borrower has the choice whether or not to accept the lenders terms and conditions.

I totally agree that the individual has a choice as to whether to apply for an Amigo loan or not. Likewise the guarantors make their own choices. Their terms and conditions are clear enough. Of course, by the time anyone gets to this stage the mere fact that they need this type of loan should be a clear signal that they should not indulge in further borrowing and that they need to look to other remedies to address their financial issues. (By this stage the hole is big enough that any sensible person would have stopped digging long ago)

The fact is, if people are stupid enough then there will always be someone ready to charge them 50% interest on a loan. If you want to be mercenary about it the business model is almost admirable as you are effectively lending to someone with a good credit history (the guarantor) at the extreme of sub-prime rates. In other words low risk, high interest. On that basis you could make the argument that the interest rate does not reflect the risk. However, for me it is the guarantor that I really fail to understand. Mainstream lenders won't for near their friend or family member as they consider them too much of a risk. These institutions are very adept at making risk-based lending decisions so what on earth makes a potential guarantor think they know better escapes me.

Willing2Learn wrote: »

This is why I hate threads like this one as mostly it is full of posts from people who have a total lack of empathy and compassion.

Such threads are certainly likely to draw some strong and often bluntly put opinions.

Willing2Learn wrote: »

It is always the most vulnerable in our communities that are negatively impacted by businesses such Amigo, who gorge themselves off of misery, anguish and pain.

The most vulnerable? I would question that such a assumption can automatically be made. The desperate - maybe? The gullible - definitely?

What is interesting is that the OP has not commented further on their story or motivation for the post. Maybe they don't actually have one but are amusing themselves by sitting back and watching the bun-fight that they started.

sourcrates

Debt Camel has an interesting article here on this type of borrowing, it appears a lot of companies fail to conduct adequate affordability checks at present, not just on the borrower, but also the guarentor, stories of guarentors with learning difficulties have also surfaced, have a read :


https://debtcamel.co.uk/guarantor-loans-extra-protection/

glennstar

sourcrates wrote: »

Debt Camel has an interesting article here on this type of borrowing, it appears a lot of companies fail to conduct adequate affordability checks at present, not just on the borrower, but also the guarentor, stories of guarentors with learning difficulties have also surfaced, have a read :


https://debtcamel.co.uk/guarantor-loans-extra-protection/

It's an interesting and well written article. I feel the point it misses is probably the same point many posts on this forum concerning an OP has lent money to a friend, spouse, etc and the situation has unravelled. The point about a Guarantor loan is that the guarantor needs to take the view that they will pay the loan - in the same way as the aforementioned loans should be seen as gifts in 99% of cases.
This doesn't address the article's comments about inadequate credit checks on both parties which I think is entirely correct but something the whole subprime industry is guilty of. Well worth a read though, good spot.

boo_star

glennstar wrote: »

It's an interesting and well written article. I feel the point it misses is probably the same point many posts on this forum concerning an OP has lent money to a friend, spouse, etc and the situation has unravelled. The point about a Guarantor loan is that the guarantor needs to take the view that they will pay the loan - in the same way as the aforementioned loans should be seen as gifts in 99% of cases.
This doesn't address the article's comments about inadequate credit checks on both parties which I think is entirely correct but something the whole subprime industry is guilty of. Well worth a read though, good spot.

Quite a few people, surprisingly, seem to view being a guarantor as being, essentially, a character witness. I'm not sure what gives them this impression but it does explain to a certain extent why otherwise sensible people get roped into this crap...

[Deleted User]

sourcrates wrote: »

Debt Camel has an interesting article here on this type of borrowing, it appears a lot of companies fail to conduct adequate affordability checks at present, not just on the borrower, but also the guarentor, stories of guarentors with learning difficulties have also surfaced, have a read :


https://debtcamel.co.uk/guarantor-loans-extra-protection/

Couldn’t that happen with any lender though. People who are vulnerable or victims of financial abuse being coerced into taking out loans and credit cards to give to their abuser?

glennstar

Lover_of_Lycra wrote: »

Couldn’t that happen with any lender though. People who are vulnerable or victims of financial abuse being coerced into taking out loans and credit cards to give to their abuser?

Agreed. I am interested in the remedies the author outlines in his conclusion. They belie the depth and clarity of the article. For example, the prospect of a Lender sharing credit information with the parties involved seems, on the face of it, very sensible. If, however, I was a Lender I would oppose this strongly as it would expose my business and Risk processes. This is bad at a number of levels, not least; 1) it tells my competitors what I'm doing, 2) it gives borrowers the ability to game the system, 3) the information generated by the CRA is in the context of the Lender's risk appetite and as such should be considered subjective and 4) it exposes the Lender's poor business practices which could result in all sorts of bad things for the business moving forward; fines, compensation, even a custodial term the Approved Person in very sever cases.

I'm not sure there are any answers in the article, but it is well worth a read as I feel it does do a good job covering the salient facts.

TripleH

antrobus wrote: »

Compared to:

1421% APR representative (variable)
https://www.oakam.com/

it's an absolute bargain.:)

Despite it's guarantor model, Amigo currently has a 30.5% impairment to revenue ratio - for every £10 it earns it writes off £3.
https://www.proactiveinvestors.co.uk/companies/news/901700/amigo-warns-of-higher-impairments-as-it-prepares-for-regulatory-crackdown-and-hard-brexit-901700.html

It is basically sub prime lending supported by just about creditworthy guarantors.

If those figures are correct, that is shocking that they write-off £3 for every £10 earned. That indicates that despite lending to people with a good credit history, (but at more sub prime rates) these loans still suffer write-offs. This shows either Amigo's business model is flawed or/and guarantors with good credit history are having their records heavily trashed by agreeing to such terms.

Further evidence to never be a guarantor to such loans and instead take a cheaper loan out yourself to pay back.

I assume being a 'guarantor' on an amigo loan would trash a good credit record anyway as ostensibly you are thevone taking out the sub prime loan?

antrobus

TripleH wrote: »

If those figures are correct, that is shocking that they write-off £3 for every £10 earned. That indicates that despite lending to people with a good credit history, (but at more sub prime rates) these loans still suffer write-offs. This shows either Amigo's business model is flawed or/and guarantors with good credit history are having their records heavily trashed by agreeing to such terms. ...

On the contrary. Amigo Holdings PLC runs a profitable business. Although it's share price has taken a big hit recently.

If you are a lender, the price of your loan needs to factor in the risk of default, The higher the risk the higher the price.

TripleH wrote: »

,,,
Further evidence to never be a guarantor to such loans and instead take a cheaper loan out yourself to pay back.

Here in MSEland that's generally speaking the advice given. Or as Judge Judy puts it, never co-sign a loan.

TripleH wrote: »

,,,
I assume being a 'guarantor' on an amigo loan would trash a good credit record anyway as ostensibly you are the one taking out the sub prime loan?

Being a guarantor on any loan will 'trash' your credit record if you fail to pay when the guarantee is called on.