observer Posted July 26, 2013 Report Share Posted July 26, 2013 Is it right to lend money at inflated interest rates, to desperate folk, who are unlikely to afford to pay it back ? Quote Link to comment Share on other sites More sharing options...
Cleopatra Posted July 26, 2013 Report Share Posted July 26, 2013 Yes... but...no... but... yes... but...maybe. How should I know? Is it right that the government allow them to do it? Lend at inflated interest rates I mean. Quote Link to comment Share on other sites More sharing options...
algy Posted July 27, 2013 Report Share Posted July 27, 2013 Nothing wrong with lending money it's the method of debt recovery and the selling on of debts that is in question, anyway the Church of England have been doing so (indirectly) so it must be OK. Most of us that own or are attempting to own our homes have taken out loans with money lenders all be it called Building societies so if we had not borrowed money that would not have been possible. Quote Link to comment Share on other sites More sharing options...
Evil Sid Posted July 27, 2013 Report Share Posted July 27, 2013 There is a bit of a difference with the interest rates for mortgages as opposed to"payday" loans. mortgage rates tend to be around the 6 or 7 percent apr whereas "payday" loans can be anything from 2000 percent upwards. The difference in a late payment is substantial as well, one late payment on a mortgage usually gets you a letter from the lender to say that you have missed or are late with the payment and a charge of maybe £25.00 for them to send it to you. One late payment on a "payday" loan and the £100.00 you borrowed is suddenly £200.00 and increasing on a daily basis. I do know of people who have borrowed £100 from wonga and ended up paying back almost £1000 when they missed the first payment. even the one that the church is planning to set up would have charges of about 75 percent apr. they would have to just to break even. Quote Link to comment Share on other sites More sharing options...
Freeborn John Posted July 27, 2013 Report Share Posted July 27, 2013 Perhaps sensing that the game would shortly be up, last month the loveable sponge pensioners bumped their interest rate up by 1600% to the equivalent of an apr of 5853%. One can only question the sanity of anyone who borrows money from people like that. Quote Link to comment Share on other sites More sharing options...
Davy51 Posted July 27, 2013 Report Share Posted July 27, 2013 We don't see anywhere near as many tv adverts for pay day loans as we used to so have some of these firms gone bust or are they doing so well they don't need to advertise. I should imagine the Godfather of Lambeth is still pretty well in with his former cronies in the city & his criticism of Wonga, although having left himself open to criticism, has given Wonga how much free advertising ? And how much good will it do the Church of England's shares in the company ,which apart from investing in loan companies is also by its own rules allowed to invest in other nefarious businesses, some of which are seemingly at odds with the good & pious image that the church likes to project ? Will the Archbishop's city experience be valuable in setting up his network of credit unions ? Furthermore, am i really bothered ? Quote Link to comment Share on other sites More sharing options...
Cleopatra Posted July 27, 2013 Report Share Posted July 27, 2013 I really don't know how they are getting away with it. When I was living in the UK my next door neighbour, who was more like a sister than a neighbour, had a loan with a well known money lending company that collected on the doorstep, so to speak. Silly woman ran up loads of debt (she had 4 children and no partner) all demanding payment and threatening court action. To cut a long story short she went to see a solicitor for advice, taking with her all the demand letters etc.,. He came upon the demand from the loan company and studued it briefly then said, "They are charging 200% interest. That is an exhorbitant rate of interest. Dont pay them anything and tell them to take you to court, the case will be thrown out". Some two weeks later, I was in hers' having coffee when there was a long 'debt collectors' ring on the doorbell. Looking to me, she nervously went to answer. I could hear their conversation. It was debt recovery manager from the loan company. Part of conversation - "You haven't made a repayment for over 2 months now". "I can't afford to pay". "Can you afford to pay 1 pound a week? We will accept that little. "To be honest. I have seen my solicitor about it and he advised me not to pay anything and let you take me to court". With resignation he replied, "We will not take you to court", closing his book as he walked back down the garden path and out through the gate. As far as I am aware she heard nothing more from the company. Quote Link to comment Share on other sites More sharing options...
Davy51 Posted July 27, 2013 Report Share Posted July 27, 2013 Perhaps sensing that the game would shortly be up, last month the loveable sponge pensioners bumped their interest rate up by 1600% to the equivalent of an apr of 5853%.One can only question the sanity of anyone who borrows money from people like that. Apparently benefit claimants could ,up till recently ,access various social fund loans to cover unexpected outlay which would then be paid back from their benefit payments. I believe they now get referred to the Wongas of this world . Quote Link to comment Share on other sites More sharing options...
observer Posted July 27, 2013 Author Report Share Posted July 27, 2013 Seem to remember that the "crash" was basically brought about by folk borrowing more than they could afford to pay back, defaulting on repayments thus creating huge amounts of "toxic debt" for the rest of us to pay off. Ironically, the latest glimmer of light at the end of the economic tunnel, isn't based on an export based recovery, but on consumer demand based on borrowing - so I guess humanity has a problem learning from it's mistakes. Quote Link to comment Share on other sites More sharing options...
Peter T Posted July 29, 2013 Report Share Posted July 29, 2013 It really worries me when I see how ignorant people can be because they think people shouldn't get into debt and have to borrow money. Take of the rose-tinted specs and see the other side of life. People who are less fortunate get into trouble normally when they are struggling to make ends meet and have 2 or 3 children to feed and clothe. It only needs a washing machine to break down or a fridge to fail and they instantly need a replacement. No money/savings, what do they do? They see this lottery win that tells them they can have instant access to money. They don't read the small print (does anyone?) and are just glad they can wash the kids clothes. BUUTT, little Johnies shoes have holes in the soles, so worried Mother buys him some which means she cannot afford the repayment on the loan. Now the interest on these can be astronomical, far higher then Sid's figure. That's how they get sucked into the loan debt system. I am on the board of a local Credit Union and I can assure you these things do happen. With a Credit Union, you get dividend on your savings and low interest loans APR 12.65% Wonga are getting Bad publicity and hopefully more and more people will join Credit Unions which is NON profit making and run by volunteers. 1 Quote Link to comment Share on other sites More sharing options...
observer Posted July 30, 2013 Author Report Share Posted July 30, 2013 Think I used the term "desperate folk" in the first post, so no one is denying there is a need out there. However, to use these companies with extortionate rates of interest, is frankly insane and consigns the user to a spiral of debt. Much better to use a credit union or for us to ask why such folk are so poor in the first place. There are however, others who used their cards to get things "now", regardless of whether they can afford it, and sellers tend not worry whether they can pay off the debt. 2 Quote Link to comment Share on other sites More sharing options...
Davy51 Posted July 30, 2013 Report Share Posted July 30, 2013 Unfortunately ,whether rightly or wrongly ,much of the economy is dependant on credit with cash no longer being king. It is sad to say though that too much reliance on credit can soon result in spiralling debt. The whole financial services sector, which is the main driving force of the British economy at present, is based on credit & debt. Quote Link to comment Share on other sites More sharing options...
Bazj Posted July 30, 2013 Report Share Posted July 30, 2013 Which is why many shops will not succumb to the old "discount for cash?" line; as they get commission from the credit companies if they sell it to you on the never never.... Quote Link to comment Share on other sites More sharing options...
Lt Kije Posted July 30, 2013 Report Share Posted July 30, 2013 It really worries me when I see how ignorant people can be because they think people shouldn't get into debt and have to borrow money.Take of the rose-tinted specs and see the other side of life. People who are less fortunate get into trouble normally when they are struggling to make ends meet and have 2 or 3 children to feed and clothe. It only needs a washing machine to break down or a fridge to fail and they instantly need a replacement. No money/savings, what do they do? They see this lottery win that tells them they can have instant access to money. They don't read the small print (does anyone?) and are just glad they can wash the kids clothes. BUUTT, little Johnies shoes have holes in the soles, so worried Mother buys him some which means she cannot afford the repayment on the loan. Now the interest on these can be astronomical, far higher then Sid's figure. That's how they get sucked into the loan debt system. I am on the board of a local Credit Union and I can assure you these things do happen. With a Credit Union, you get dividend on your savings and low interest loans APR 12.65% Wonga are getting Bad publicity and hopefully more and more people will join Credit Unions which is NON profit making and run by volunteers. Completely agree, and well done Peter for helping out with credit unions Quote Link to comment Share on other sites More sharing options...
observer Posted July 30, 2013 Author Report Share Posted July 30, 2013 Money lending IS an essential feature of the capitalist system, in which money (capital) is used (invested), to make more money (profit). The question is, what constitutes a reasonable profit (interest rate) in any given circumstance and whether the borrower has the ability to repay the loan? The financial crash, for which we are all now paying through austerity; was caused by Governments and individuals borrowing more than they the could afford to repay through earnings, thus entering a spiral of debt. Where folk could not repay loans, the debt became "toxic", and the tax-payer picked up the tab. SO, if we don't want a repeat performance, it would seem prudent to tighten up regulation (including the pay day loan industry) of the financial sector. Quote Link to comment Share on other sites More sharing options...
fugtifino Posted July 30, 2013 Report Share Posted July 30, 2013 Agree with obs. And this... It really worries me when I see how ignorant people can be because they think people shouldn't get into debt and have to borrow money.Take of the rose-tinted specs and see the other side of life. People who are less fortunate get into trouble normally when they are struggling to make ends meet and have 2 or 3 children to feed and clothe. It only needs a washing machine to break down or a fridge to fail and they instantly need a replacement. No money/savings, what do they do? They see this lottery win that tells them they can have instant access to money. They don't read the small print (does anyone?) and are just glad they can wash the kids clothes. BUUTT, little Johnies shoes have holes in the soles, so worried Mother buys him some which means she cannot afford the repayment on the loan. Now the interest on these can be astronomical, far higher then Sid's figure. That's how they get sucked into the loan debt system. I am on the board of a local Credit Union and I can assure you these things do happen. With a Credit Union, you get dividend on your savings and low interest loans APR 12.65% Wonga are getting Bad publicity and hopefully more and more people will join Credit Unions which is NON profit making and run by volunteers. ...gets my vote for being the best post Peter's ever made. Quote Link to comment Share on other sites More sharing options...
Davy51 Posted July 31, 2013 Report Share Posted July 31, 2013 What surprises me is that "loan sharks" are being allowed to operate on a national scale with the backing & investment of many organisations that are supposed to be respected household names. What is the difference between a villain setting up in your neighbourhood with a gang of "heavies" as financial advisors & these companies legally , but not morally ,fleecing the public? Quote Link to comment Share on other sites More sharing options...
Peter T Posted July 31, 2013 Report Share Posted July 31, 2013 Think I used the term "desperate folk" in the first post, so no one is denying there is a need out there. However, to use these companies with extortionate rates of interest, is frankly insane and consigns the user to a spiral of debt. Much better to use a credit union or for us to ask why such folk are so poor in the first place. There are however, others who used their cards to get things "now", regardless of whether they can afford it, and sellers tend not worry whether they can pay off the debt. obs, valid points and I especially agree with the last sentence. Somewhere down the line "parental guidance" has gone absent. I fear that one of the problems that will be difficult to eradicate is the ease with which people get their money and the lack of guidance about how they spend it. The worst part of all this imo, is the fact that it is so easy to run up credit with no thought to the consequences. I suppose that they get their ideas from Whitehall. The politicians don't what happens in the Communities. Mobile phones is another where it is easy for people to get a phone on contract (cheaper) and run up hundreds of pounds of debt without any checks. Crazy. Quote Link to comment Share on other sites More sharing options...
Davy51 Posted August 2, 2013 Report Share Posted August 2, 2013 Apparently ,the government backed Money Advice Service has estimated that 60% of households in the north west are struggling to pay their monthly outgoings....no wonder these pay day loans firms are flourishing. Quote Link to comment Share on other sites More sharing options...
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