indierich06 Posted 22 November 2012 Share Posted 22 November 2012 Is it true that if you use a pay day loan irrelevant of ammount you'll be rejected a mortgage for the next 5 years. A mate at work uses one regularly, its fair to say its crippled him. He is now depressed, sad, quiet, lonely and to make matters worse he gets phone calls at work (mobile and work phones) with reminders to pay. Non stop! He went to a proper bank a few weeks back to get a £4k loan to pay off the payday loans, they rejected him cos hes already in the shit and as a result he went to bright house and bought a 40" smart TV to make himself feel better. £12 a week. £48 a month. 2 years = nearly £1,200 telly! Vicious circle Not being funny, but your mate sounds like an absolute mug. Link to comment Share on other sites More sharing options...
stix Posted 22 November 2012 Share Posted 22 November 2012 Not being funny, but your mate sounds like an absolute mug. NOT being funny? Link to comment Share on other sites More sharing options...
Houdini Logic Posted 22 November 2012 Share Posted 22 November 2012 Maybe I'm too simplistic in my view but if you don't like it then don't use it - there are many alternatives for medium to long term debt so don't use a payday loan company. When my Olympic tickets unexpectently came out last year I borrowed £350 from Wonga to tide me over for the few days until my next pay. I got paid, the money went out and being that I didn't have the embarresment of calling a family and friend or being turned down by a bank and in fact having to do nothing other than spend 5 minutes on a website I'd say that the £20 interest was more than reasonable. I have no intention of ever using them again but I certainly wouldn't rule it out if a similar situation arose. I can partly see the argument that these companies prey on the vunerable or gullible, but there really has to be a line drawn and being that sites like Wonga list the APR, the exact amount of interest and repayment date before you can even click 'apply' then I feel at some point you have to shift the responsibility from the company to the individual. Link to comment Share on other sites More sharing options...
Captain... Posted 22 November 2012 Share Posted 22 November 2012 Maybe I'm too simplistic in my view but if you don't like it then don't use it - there are many alternatives for medium to long term debt so don't use a payday loan company. When my Olympic tickets unexpectently came out last year I borrowed £350 from Wonga to tide me over for the few days until my next pay. I got paid, the money went out and being that I didn't have the embarresment of calling a family and friend or being turned down by a bank and in fact having to do nothing other than spend 5 minutes on a website I'd say that the £20 interest was more than reasonable. I have no intention of ever using them again but I certainly wouldn't rule it out if a similar situation arose. I can partly see the argument that these companies prey on the vunerable or gullible, but there really has to be a line drawn and being that sites like Wonga list the APR, the exact amount of interest and repayment date before you can even click 'apply' then I feel at some point you have to shift the responsibility from the company to the individual. Why in god's name would you be embarrassed to ask family or friends? That's what they are there for isn't it, was £20 really worth wasting to save a bit of pride? Link to comment Share on other sites More sharing options...
Houdini Logic Posted 22 November 2012 Share Posted 22 November 2012 Why in god's name would you be embarrassed to ask family or friends? That's what they are there for isn't it, was £20 really worth wasting to save a bit of pride? Bit of a silly question to ask without knowing someone's situation really. Yes, £20 was definitely worth it. Link to comment Share on other sites More sharing options...
Captain... Posted 22 November 2012 Share Posted 22 November 2012 Bit of a silly question to ask without knowing someone's situation really. Yes, £20 was definitely worth it. Not really, would much rather take a loan off a mate and give them the £20 than some awful website, obviously if that isn't possible (which is not what you said) then payday loans are a very last resort, but if I had a mate who could lend me the money, or family, I would ask, and have no problem lending it to someone in a similar position. Link to comment Share on other sites More sharing options...
Monk Posted 22 November 2012 Share Posted 22 November 2012 The 'well everyone know's it's a rip off so why do it' argument is no different really than saying people shouldn't smoke, drink too much, eat bad food etc. Not everyone has heard or understands the argument against Wonga et al. Marketing is a very powerful tool, and these companies have simply had too much freedom to rip off vulnerable people when they really should be getting support. The FSA need to look at the interest rates, and either regulate them or limit them. A expensive credit card might charge 20% APR, which used to be pretty much the top of the pile in terms of interest. So how have we got from there to thousands of percents, with nothing in between in the marketplace. My personal view is that APR should be limited to BoE base rate + a certain mark up - say 15-20% for credit cards, and outside of that you have to charge a fixed fee. This would enable the pay day lenders to continue to exist but would enable 100% understanding on the part of their customers. After all, these are intended as short term loans, the interest rate is not essentially intended to be compounded - so why not just charge a flat fee anyway? Link to comment Share on other sites More sharing options...
Houdini Logic Posted 22 November 2012 Share Posted 22 November 2012 The 'well everyone know's it's a rip off so why do it' argument is no different really than saying people shouldn't smoke, drink too much, eat bad food etc. Not everyone has heard or understands the argument against Wonga et al. Maybe we should hide these websites behind big screens at supermarkets or put big coloured labels on them depending on how bad they are Link to comment Share on other sites More sharing options...
Captain... Posted 22 November 2012 Share Posted 22 November 2012 The 'well everyone know's it's a rip off so why do it' argument is no different really than saying people shouldn't smoke, drink too much, eat bad food etc. Not everyone has heard or understands the argument against Wonga et al. Marketing is a very powerful tool, and these companies have simply had too much freedom to rip off vulnerable people when they really should be getting support. The FSA need to look at the interest rates, and either regulate them or limit them. A expensive credit card might charge 20% APR, which used to be pretty much the top of the pile in terms of interest. So how have we got from there to thousands of percents, with nothing in between in the marketplace. My personal view is that APR should be limited to BoE base rate + a certain mark up - say 15-20% for credit cards, and outside of that you have to charge a fixed fee. This would enable the pay day lenders to continue to exist but would enable 100% understanding on the part of their customers. After all, these are intended as short term loans, the interest rate is not essentially intended to be compounded - so why not just charge a flat fee anyway? It should be taken away from private companies and equivalents offered by banks, where the money is automatically deducted on payday to ensure people don't get into a crippling spiral of debt. Banks always used to provide an emergency overdraft facility, more or less the same thing, then as soon as you were paid you stopped being overdrawn, and couldn't go overdrawn again, some even provided this facility for free. Link to comment Share on other sites More sharing options...
DB11 Posted 22 November 2012 Share Posted 22 November 2012 Can't really imagine that I'd want to ever use one of these companies. I'd much prefer to ask to borrow from a mate, or my parents. If people can manage their finances, then if they feel this sort of loan is best for them, then fine, but I don't think it's for me. Link to comment Share on other sites More sharing options...
Houdini Logic Posted 22 November 2012 Share Posted 22 November 2012 It should be taken away from private companies and equivalents offered by banks, where the money is automatically deducted on payday to ensure people don't get into a crippling spiral of debt. That's called a loan and believe it or not they can be difficult to get. If the banks were to make them more easily available then they'd have to factor that risk into their APR and they won't do that because they don't want to be tarred with the same brush as is evident on these two pages. It will never happen. Banks always used to provide an emergency overdraft facility, more or less the same thing, then as soon as you were paid you stopped being overdrawn, and couldn't go overdrawn again, some even provided this facility for free. But now they don't. In fact they hardly even lend to people to buy a house where there's an asset they can secure. Arguments against payday loans companies should not consist of remembeing how things used to be or how we'd like to see things in our Utopian world. Link to comment Share on other sites More sharing options...
BunkMoreland Posted 22 November 2012 Share Posted 22 November 2012 As long as the amount you are borrowing, the amount you are to pay back and when and the consequences of not doing so are clear then there is no problem. Some people will abuse it and get themselves in trouble, but it's the old dilemma of how much are you willing to restrict the freedom of the many to protect the few from themselves. In the UK we often seem to fall on the side of heavy restrictions, a mummy state, which assumes we're all idiots, while I personally prefer the common sense approach of simply ensuring people are provided with every opportunity to make themselves aware of the risks, and from there it's up to them. Link to comment Share on other sites More sharing options...
Guest Posted 22 November 2012 Share Posted 22 November 2012 Lenders can't win; if they lend money to those who are unlikely to afford the repayments, then they are irresponsible, regardless of interest rates. If they don't lend people money, then they are still in the wrong. I've heard there is a loophole where they won't take legal proceedings against anybody unless its over £1000, not sure how true that is. It may be company policy not to issue proceedings, but it's not a loophole, and I certainly wouldn't rely on it. A word of warning to homeowners; changes from the 1st October 2012 mean that any County Court Judgment may be secured against your property, even if you've been ordered to pay an affordable sum per month in instalments, and you have not defaulted. Whilst the courts have a discretion in making an order securing a precisely unsecured debt, the reality is they are being made, unless you are able to pay it all back, including the costs, within a "reasonable time", normally about 2-3 years. Link to comment Share on other sites More sharing options...
cecchini Posted 22 November 2012 Share Posted 22 November 2012 Problem is that we don't all have the same levels of education or indeed intelligence. Those countries with strict rules on lending (Netherlands, Germany, Switzerland etc) are not in the same sh1t as countries that adopted a more relaxed approach (like the UK etc) In the end borrowed money has to be paid back, its been said many times on this site, "if you ain't got it, don't spend it" I myself have been in to credit cards for stupid amounts as a younger man. Wanting a mortgage, car, bike, beer, women and all those things we are made to feel are totally essential to our well-being and credibility as young people. Now I have 3 kids, a wife etc and NO credit card debt. It took a while but it was worth it. Just don't borrow money for stupid stuff. If you have a good history, most banks will give you an overdraft for almost free in times of need. Today's society tells us that we have to have x or y and Z to be in with a chance of being seen to be "cool" - its all bollox. If you generally live within your means, short term credit (at reasonable rates) is easy to get. Ill get off me soap box now! somebody once said, money in = money out = heaven; Money in = money out +1 = Hell. (was about 100 years ago) Link to comment Share on other sites More sharing options...
Rincewind Posted 22 November 2012 Share Posted 22 November 2012 Think that was Dickens. Might have been Pickwick Papers. Link to comment Share on other sites More sharing options...
Captain... Posted 22 November 2012 Share Posted 22 November 2012 That's called a loan and believe it or not they can be difficult to get. If the banks were to make them more easily available then they'd have to factor that risk into their APR and they won't do that because they don't want to be tarred with the same brush as is evident on these two pages. It will never happen. But now they don't. In fact they hardly even lend to people to buy a house where there's an asset they can secure. Arguments against payday loans companies should not consist of remembeing how things used to be or how we'd like to see things in our Utopian world. The difference in the first instance is that your pay check is paid into your bank so any "pay day" loan can be instantly paid off with no chance of crippling spiralling debts, in the case of money lenders outside the bank you are then responsible for having to pay it off yourself. It is also much easier for the bank to see how much money you have, what other direct debits you have set-up and how much money you can afford to borrow to be able to pay it back without incurring any excess penalties. Ah yes the Utopia that was 10 years ago, how I wish we could go backwards in time, and how vital removing this this facility to provide small emergency amount is to getting the banks back on track, it was probably these emergency overdraft extensions that got banks and subsequently us into this economic mess. Link to comment Share on other sites More sharing options...
Captain... Posted 22 November 2012 Share Posted 22 November 2012 As long as the amount you are borrowing, the amount you are to pay back and when and the consequences of not doing so are clear then there is no problem. Some people will abuse it and get themselves in trouble, but it's the old dilemma of how much are you willing to restrict the freedom of the many to protect the few from themselves. In the UK we often seem to fall on the side of heavy restrictions, a mummy state, which assumes we're all idiots, while I personally prefer the common sense approach of simply ensuring people are provided with every opportunity to make themselves aware of the risks, and from there it's up to them. The problem is not that people will abuse it and get themselves into trouble, the problem is companies like Wonga rely on people mis-using it and abusing it, it is built into their business model, the same as all the consolidated debts companies did 5 years ago. It is not that we are too stupid to understand or manage our own debts, it is that we are encouraged to mis-manage them, given seemingly easy solutions which lead to more problems and more profit for the companies, and as usual it is the exploitation of the poor, we ramp up this aspirational side of things, this need and desire for more things, then dangle this carrot in front of people's faces, you can get it all in just 3 easy clicks, sign here and here for your easy money and a life time of debt. Link to comment Share on other sites More sharing options...
AdamN Posted 22 November 2012 Share Posted 22 November 2012 I myself have been in to credit cards for stupid amounts as a younger man. Wanting a mortgage, car, bike, beer, women and all those things we are made to feel are totally essential to our well-being and credibility as young people. Now I have 3 kids, a wife etc and NO credit card debt. It took a while but it was worth it. Just don't borrow money for stupid stuff. If you have a good history, most banks will give you an overdraft for almost free in times of need. Just on this point. I'm 23 now and have never had a credit card, but I've always been under the impression that you kind of have to have one to improve your credit rating for the future. I've always thought it's far more sensible to spend the money you have, as opposed to what you think you're going to have (except for smaller, more 'affordable' things such as phone bills), but I'm not sure if banks see it the same way. Anyone care to shed some light on it? Link to comment Share on other sites More sharing options...
RobHawk Posted 22 November 2012 Share Posted 22 November 2012 The problem is these companies prey on the vulnerable. Part of my job is to advise students away from pay day loans. The interest is crippling and most students don't even have a payday so why are payday loans advertising to them? some of the rubbish they put on their website is ridiculous As if they are your best friend when realistically they just want your money! If people are clever and think about what they are spending they would know that with a credit card (even one with a high APR) if they pay the balance off in full (i.e. when they get paid) they pay no interest and this should help improve their credit rating. Think of the adverts! wonga is a great example! they are on 95% of the time during the day. Traditionally to people who don't have jobs and won't have a payday. The contain puppets of old people! This conjures images of trust and safety because its like borrowing money from your grandparents. Its all a game and unfortunately a lot of people lose! I'm also aware of some pay day loan companies who purposefully have made it very difficult to repay the loans taken so interest continues to mount while people try desperately to get in touch with them. Obviously this is wrong immoral and illegal but it happens. Fo people who think the APR's are reasonable in line with the risk taken, this is worth a read http://blog.moneysavingexpert.com/2011/09/21/fact-borrowing-100-at-wongas-apr-costs-more-than-the-us-national-debt-over-14-trillion-after-7-years/ Finally, if any one is aware of any students having issues with Payday loans, advise them to speak with wither their University's student funding advisor or contact www.nasma.org.uk/students for more advise and support. If you are not a student, contact your local CAB http://www.citizensadvice.org.uk/ Link to comment Share on other sites More sharing options...
RobHawk Posted 22 November 2012 Share Posted 22 November 2012 Just on this point. I'm 23 now and have never had a credit card, but I've always been under the impression that you kind of have to have one to improve your credit rating for the future. I've always thought it's far more sensible to spend the money you have, as opposed to what you think you're going to have, but I'm not sure if banks see it the same way. Anyone care to shed some light on it? If you spend on a credit card and repay in full that month you will pay nothing but it will help improve your credit rating shuld you ever want a mortgage etc. The problem with credit cards is people think its free money and go nuts! Before they know it they owe £3000, are paying minimum payments of about £50 and the debt is usually only going down by pence because of the interest being added on! Using a Credit card wisely can be a good move! You just have to be careful! Link to comment Share on other sites More sharing options...
Steve_Walsh5 Posted 22 November 2012 Share Posted 22 November 2012 Just on this point. I'm 23 now and have never had a credit card, but I've always been under the impression that you kind of have to have one to improve your credit rating for the future. I've always thought it's far more sensible to spend the money you have, as opposed to what you think you're going to have (except for smaller, more 'affordable' things such as phone bills), but I'm not sure if banks see it the same way. Anyone care to shed some light on it? I'm 24 and I tried to get a Morgatge a couple of years ago and they turned me down as I had no credit rating, even though I had a big deposit and a good job. What I did was get a credit card from natwest with a £1050 limit and all I used it for was to fill my car up every month with petrol. Never missed a payment as it was only £60 a month and after 18 months I had a good credit rating. Link to comment Share on other sites More sharing options...
cecchini Posted 22 November 2012 Share Posted 22 November 2012 If you spend on a credit card and repay in full that month you will pay nothing but it will help improve your credit rating shuld you ever want a mortgage etc. The problem with credit cards is people think its free money and go nuts! Before they know it they owe £3000, are paying minimum payments of about £50 and the debt is usually only going down by pence because of the interest being added on! Using a Credit card wisely can be a good move! You just have to be careful! Agree with this, get a card, use it if you really need to, but pay it off, see it as a short term loan from a mate who needs it back. Credit card companies also have to provide certain guarantees against fraud and in some cases even theft (i.e. they pay you back if something you bought on the card is stolen) Link to comment Share on other sites More sharing options...
SystonFox Posted 22 November 2012 Share Posted 22 November 2012 Not being funny, but your mate sounds like an absolute mug. Oh he is. He just won't listen to anyone. Money is his nemesis. He has none yet he wants loads and will do literally ANYTHING to get some. Wouldn't surprise me if he rented himself out soon Link to comment Share on other sites More sharing options...
Carl the Llama Posted 22 November 2012 Share Posted 22 November 2012 Oh he is. He just won't listen to anyone. Money is his nemesis. He has none yet he wants loads and will do literally ANYTHING to get some. Wouldn't surprise me if he rented himself out soon Does he have a balcony? I prefer not to smoke inside. Link to comment Share on other sites More sharing options...
SystonFox Posted 22 November 2012 Share Posted 22 November 2012 Does he have a balcony? I prefer not to smoke inside. Ya wha? Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.