Outrageous Profiteering

Discussion in 'Finance, Property, Law' started by Infiltrator, Dec 16, 2009.

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  1. Been laid up all week and so have been watching a bit of daytime telly. Not something I do very often. All I can say is thank feck for a bit of Sky +!

    Anyway, watching the telly (bit of Top Gear on Dave, helps while away the time) I was semi watching all those ads there are for stupid people to send their gold to get enough cash to buy their next packet of fags or a litre of petrol with when one particular ad stood out.

    It was a company offering loans on your next pay packet. It wasn't so much what was being said, it was what was on the small print at the bottom of the screen. It said that the typical APR on these loans was....wait for it.....2356%!

    Now I actually thought that I had misread it, perhaps it was 23.56%. I suppose I could have amost accepted 235.6%, but no, upon doing a quick bit of research I found this on their website -

    "Terms and Conditions apply. Finance charge will be between £10 and £14.75 per £50 borrowed. Typical 2356% APR. †Loan amounts are based on consumer's credit history and ability to repay loan. Not everyone may qualify for £1500"

    Now I have very little sympathy for chavs in life, but these loans are only targeted an one particular segment of society, and these are the people who can probably least afford this sort of sharking. Surely this sort of thing should be illegal.
  2. This is a typical reflection of how sad our society has become.
  3. Are these not the payday loans that are design for a few days where you would typically borrow £100-£150 and pay back ~£25-£50 for the pleasure. not payback £nnnnnn over a full year plus some ...

    edited to add comparision examples
    Type of loan Amount Month Total repayment APR Actual interest
    Installment £500 36 £745 16.9% 49%
    Installment £500 60 £970 16.9% 94%
    Payday £500 1 £625 1737% 25%
  4. Yep. The APR sounds horrific because it's annual, but it's quite reasonable on a 7 or 14 day loan.

    That said, I saw a programme a while back on the tactics these companies employ to get their cash back from those who default. Scary stuff!
  5. Outrageous ? YES! the Broon government has failed ( as usual ) to outlaw such excesses and has relied on the get out of ' allowing market forces to prevail'. I am glad that he didnt use that position as regards the decision of who runs Afghanistan. However the real alternative is to look up your local Credit Union who offer unsecured loans for short periods at reasonable rates, plus adventageous saving rates.
  6. in_the_cheapseats

    in_the_cheapseats LE Moderator

    I can't accept that comment. I don't think any APR of that scale is ever allowable.

    I think there is new legislation in the pipeline to stop this. Can't come soon enough.

    If there was something else I'd stop it is the "sell your gold for cash" drive at the mo. I suppose you can argue it is milking the stupid and that they deserve to get fleeced. But that again is what legislation for - protecting the idiots and naive of society. :D
  7. Sad thing is if you loan sharked on an estate for half of that interest you would be hounded by the police, yet they are advertising on national TV!
  8. not trying to defend them .. however ..

    what would you consider reasonable ? bear in mind there isnt normally an arrangement fee or at least on the example i found ..

    how would you go about charging for your time ?
  9. http://newsarse.com/2009/12/09/idiots-disappointed-after-posting-their-gold-to-complete-strangers/

    The dodgy loans are not illegal and the only people who make use of them are those who wouldn't be offered credit by any reputable lender.

    Perhaps you also saw a few of the 'wipe out your credit card debts' adverts on the same channel. Yep, it would contravene their Yooman Rights to repay the money they've squandered on utter crap that they didn't need.

    So the law allows them to walk away from their debt. What happened next, Brian?

    A few banks go tits up and they're wary of lending money to anyone without a 24 carat credit rating (and a house). Shifty heavy types start offering loans to the desperate. Welcome to Great Britain 2009.
  10. I know what you're saying, but the loans are short term (i.e. We lend you £100, you pay us back £110 in 14 days time) so the APR is both misleading and irellevant.

    It's the dubious business practices of these firms (they really are licensed loan sharks) that cause me concern.
  11. I spotted an advertisement the other day for loans via a text message. The small print claimed 990% pa.

    That is awful - and I agree that such loans should be banned.

  12. Why? Do people need the state to hold their hand throughout their life?
  13. This really can't be emphasised often enough. Credit Unions really are the way to go. Your first loan may be limited to about £500 or so, but you won't get fleeced and most Credit Unions are flexible enough to reschedule loans with minimum addage if times really do become tough for individuals.

  14. Anyone stupid enough to take out a loan with a 2.6m% interest rate and not repay it in the time limit specified before that interest rate kicks in gets everything they deserve.

    If the general population wasn't so full of the terminally thick who take out these loans, the company wouldn't exist.