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  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 15th Jan 14, 11:00 AM
    • 2,324Posts
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    Former MSE Helen
    MSE News: Payday lenders to share real-time information on borrowers
    • #1
    • 15th Jan 14, 11:00 AM
    MSE News: Payday lenders to share real-time information on borrowers 15th Jan 14 at 11:00 AM
    "Payday lenders are to use an information sharing service on consumers' borrowing habits to help improve loan decisions..."

    Read the full story:

    Payday lenders to share real-time information on borrowers




    Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.

Page 1
  • michael1983l
    • #2
    • 15th Jan 14, 11:03 AM
    • #2
    • 15th Jan 14, 11:03 AM
    The payday lenders don't care if the borrower has multiple loans, this is just paying lip service to the government as they will still dish them out to people anyway. The most profitable customer for the Payday Lender is that of which who will roll over their loan. The more loans they have the more likely they are to roll the loan over.

    the sceptic in me leads me to believe that the lenders will use this information specifically to target these customers who cannot afford to borrow rather than use it to prevent them borrowing.
    • antrobus
    • By antrobus 15th Jan 14, 11:09 AM
    • 16,721 Posts
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    antrobus
    • #3
    • 15th Jan 14, 11:09 AM
    • #3
    • 15th Jan 14, 11:09 AM
    ... The most profitable customer for the Payday Lender is that of which who will roll over their loan. The more loans they have the more likely they are to roll the loan over.......
    Originally posted by michael1983l
    On the contrary. The most profitable customer for the Payday Lender is the one that actually repays the loan. Even the dumbest Payday Lender will twig that there is a correlation between defaults and roll overs.
  • michael1983l
    • #4
    • 15th Jan 14, 11:13 AM
    • #4
    • 15th Jan 14, 11:13 AM
    On the contrary. The most profitable customer for the Payday Lender is the one that actually repays the loan. Even the dumbest Payday Lender will twig that there is a correlation between defaults and roll overs.
    Originally posted by antrobus
    Then why did the government review say the opposite then?
    • rizla king
    • By rizla king 15th Jan 14, 11:23 AM
    • 2,843 Posts
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    rizla king
    • #5
    • 15th Jan 14, 11:23 AM
    • #5
    • 15th Jan 14, 11:23 AM
    The most profitable will be one who rolls over the loan multiple times, or defaults, incurring huge amounts of extra fees and interest, and THEN pays it off.
    • Aquamania
    • By Aquamania 15th Jan 14, 11:57 AM
    • 2,027 Posts
    • 827 Thanks
    Aquamania
    • #6
    • 15th Jan 14, 11:57 AM
    • #6
    • 15th Jan 14, 11:57 AM
    The payday lenders don't care if the borrower has multiple loans, ....
    Originally posted by michael1983l
    Hopefully you are correct.

    Otherwise those who are forced to use PDLs when all other legitimate avenues of credit are denied to them will be forced back to the unregulated and illegitimate lenders.
    • antrobus
    • By antrobus 15th Jan 14, 12:19 PM
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    antrobus
    • #7
    • 15th Jan 14, 12:19 PM
    • #7
    • 15th Jan 14, 12:19 PM
    Then why did the government review say the opposite then?
    Originally posted by michael1983l
    Presumably you mean the OFT compliance review? It merely stated that "encouraging rollovers is a deliberate commercial strategy for some firms".


    The most profitable will be one who rolls over the loan multiple times, or defaults, incurring huge amounts of extra fees and interest, and THEN pays it off.
    Originally posted by rizla king
    Well quite. But it's the paying it off that's the key. It's the ones that don't that cost.
  • michael1983l
    • #8
    • 15th Jan 14, 12:33 PM
    • #8
    • 15th Jan 14, 12:33 PM
    Hopefully you are correct.

    Otherwise those who are forced to use PDLs when all other legitimate avenues of credit are denied to them will be forced back to the unregulated and illegitimate lenders.
    Originally posted by Aquamania
    Yeah, yeah, I've heard that one before as a legitimate reason to have payday lenders. Answer me this, have you ever tried to find a loan shark? I have and guess what it is impossible, as I tried very hard at one time but didn't even get close to finding one. So how do all these people driven to illigal lenders as you put it, actually obtain these loans in the first place. I genuinely will be interested to find out just how they do it.
  • michael1983l
    • #9
    • 15th Jan 14, 12:35 PM
    • #9
    • 15th Jan 14, 12:35 PM
    Presumably you mean the OFT compliance review? It merely stated that "encouraging rollovers is a deliberate commercial strategy for some firms".




    Well quite. But it's the paying it off that's the key. It's the ones that don't that cost.
    Originally posted by antrobus

    Very few people actually end up not paying anything at all in reality, even if they default. Without going bankrupt it is difficult to get away with not paying anything and bankrutcy is a bit of an extreme measure just to get one over on a payday lender don't you think?
    • Herzlos
    • By Herzlos 15th Jan 14, 2:28 PM
    • 9,791 Posts
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    Herzlos
    Well quite. But it's the paying it off that's the key. It's the ones that don't that cost.
    Originally posted by antrobus
    I'm sure they won't be too upset if someone defaults after rolling it over a couple of times and paying back more than the capital in interest.
  • Apples2
    Answer me this, have you ever tried to find a loan shark? I have and guess what it is impossible, as I tried very hard at one time but didn't even get close to finding one.
    Originally posted by michael1983l
    That's because there are Payday Loans readily available.

    They will appear quick enough if PDL's started disappearing.

    Shutting off the supply in no way shuts off the demand.

    Ironically you have even gone searching for a Loan Shark despite having a few dozen payday loans so you can't go suggesting there is no market.
  • VictimOfImpersonation
    The PDL companies will be laughing their heads off. They manoeuvred the Parliamentary Select Committee into recommending they all receive immediate access to CRA data.

    One Payday lender already had a special relationship with CallCredit before they started their business in the UK five odd years ago - yes, WONGA! They bought the raw data from CallCredit and then decided who they'd aim at.

    They have retained a privileged position ever since, because other PDLs have not had up to date CRA data and so asked the Select Committee for it while Wonga smiled on sweetly.

    As for rollovers, the PDLs have already agreed to limit rollovers to a maximum of two for the same debt to the same customer, and agreed that they had no way of knowing if a new customer was in fact "rolling over" a debt or multiple debts from another PDL. This has been used as the excuse for the move announced today, but none of them have agreed that a rollover between 2 or more PDLs is in fact any rollover at all - they conveniently failed to mention that even if they could see multiple recent indebtedness they would hardly be shooting their business model in the foot and be terming any consolidation (partial or otherwise) as a "rollover".

    Simply put, if they think they can cause their share of this type of bad for the customer business to be profitable and leave competitors (major and cuddly like Wonga. or grey like sharks) holding the baby then they will.

    A great deal of time was spent at the last Select Committee discussing "referrals" (of applicants who did not satisfy the top PDLs criteria for lending) to the greyer end of the market. That was another area where the Select Committee failed to get proper commitment for PDLs to desist from doing so.

    I really think more bad than good comes from allowing PDLs to have the very latest CRA data. They are almost commercially bound (given the lack of scruples in what passes as commercial interest thesedays) to abuse this further privilege.
    • Monkeyballs
    • By Monkeyballs 15th Jan 14, 3:56 PM
    • 1,849 Posts
    • 4,768 Thanks
    Monkeyballs
    Hi all,

    Maybe I just have friends in very shady places but I wanted to find a shark to lend to me I could have done it fairly easily LOL then again they were "friends of friends" and I knew better than to go near them!

    Anyway...

    So this is voluntary? I'm guessing that the high street lender, those big names who are the 'the least worst' will sign up and then anyone looking for a loan would start going to the less well known ones who may not be overly pleasant to deal with who don't sign up because if they do then they would be seen to be lending irresponsibly?

    I don't think it's a terrible idea in principle I just think it ought to be compulsory for all lenders should be forced to sign up and agree that if the customer is provided funds despite information on the database then that debt is null and void so the customer does not need to repay it and they have their lending license (if there is such a thing, I have no idea!) either suspended pending investigation or revoked completely.

    That way no lender would ever lend to someone if there in black and white on the database that the customer was a risk and has an existing agreement with x, y and z lender because they'd be on a guaranteed loser!

    The database will have to be updated in realtime however because if I wanted to I could go and lend from 4 PDL's who are all within a couple of hundred meters of each within an hour...

    MB
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    • Poppops
    • By Poppops 15th Jan 14, 5:31 PM
    • 303 Posts
    • 494 Thanks
    Poppops
    Yeah, yeah, I've heard that one before as a legitimate reason to have payday lenders. Answer me this, have you ever tried to find a loan shark? I have and guess what it is impossible, as I tried very hard at one time but didn't even get close to finding one. So how do all these people driven to illigal lenders as you put it, actually obtain these loans in the first place. I genuinely will be interested to find out just how they do it.
    Originally posted by michael1983l
    There is one who lives on my road. He got caught a couple of years ago and was supposed to be selling his house to pay people back as he told the court he had no other assets left.

    But he is still living there
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    • Thrugelmir
    • By Thrugelmir 15th Jan 14, 6:57 PM
    • 63,694 Posts
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    Thrugelmir
    The most profitable will be one who rolls over the loan multiple times, or defaults, incurring huge amounts of extra fees and interest, and THEN pays it off.
    Originally posted by rizla king
    Except they don't. Bad debtors are the bane of every business. Better to do less business with customers that do repay.
    “The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett
    • Pincher
    • By Pincher 16th Jan 14, 6:11 AM
    • 6,516 Posts
    • 2,491 Thanks
    Pincher
    How much did loan sharks used to charge?

    I contend they are charging exactly the same as before, i.e. desperation rate, except they can now legitimately take your chattel with the law behind them.
    • bigadaj
    • By bigadaj 16th Jan 14, 9:03 AM
    • 10,832 Posts
    • 7,171 Thanks
    bigadaj
    How much did loan sharks used to charge?

    I contend they are charging exactly the same as before, i.e. desperation rate, except they can now legitimately take your chattel with the law behind them.
    Originally posted by Pincher
    Well I don't think wonga charge in broken legs.

    Remember a debate on minder many years ago about such transactions and a philosophically discussion about whether the violence acted as a full and final settlement or whether the balance was outstanding, there was a difference of opinion from what I recall.
  • VictimOfImpersonation
    Well I don't think wonga charge in broken legs.
    Originally posted by bigadaj
    No perhaps they let their grey friends deal with the seamier side of debt-collection. Meantime they have just been handed the keys to break you with CRA data when they feel like putting their minds to it.
  • BillJones
    No perhaps they let their grey friends deal with the seamier side of debt-collection. Meantime they have just been handed the keys to break you with CRA data when they feel like putting their minds to it.
    Originally posted by VictimOfImpersonation
    Would you prefer that people get to default and then keep it secret?
  • VictimOfImpersonation
    Would you prefer that people get to default and then keep it secret?
    Originally posted by BillJones
    Yes. Then if you are daft enough to pay yourself from gains taken prematurely from loans to the wrong sort of customer then you might find you had to work to retain your living. That might be no bad thing.
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