From The Metro:
Nearly one million people say they took out at least one payday loan to keep a roof over their heads, according to Shelter, which called its findings ‘shocking’. With some lenders charging 4,000 per cent APR, the charity warned this type of short-term finance was ‘totally unsustainable’ and urged the vulnerable to seek help.
Cherie, 28, of Wokingham is one such victim: "Mummy always told me I should save myself for a nice twenty-five year mortgage from a High Street lender. When the mortgage first walked into my life, it gave me a five per cent cash back and paid my legal and valuation fees for me. I couldn't have been happier! Mummy and Daddy even gave us a ten per cent deposit as a moving-in-together present.
"But no matter how hard I worked at our relationship, it just demanded more and more from me until I just couldn't give any more. I feel so ashamed to talk about it now, but I missed the old spark we had at the beginning. That's when I first met a payday loan, which promised me everything my old mortgage couldn't give me any more. It didn't feel as if I was being unfaithful - I was head over heels again and turned a deaf ear to all the warnings.
"Of course, after a few months, the payday loan was starting to rough me up as well, it would steal from me what my old mortgage hadn't already taken. It even tried to introduce me to a few of its friends who ended up assaulting me and leaving me for dead. I love it, but I'm scared of it and I don't know which way to turn. Maybe I'll find happiness in the arms of a lottery win?"
Shelter's chief executive Campbell Robb explained the risks that payday loans pose to families and individuals, telling The Economic Voice: "It can quickly lead to debts snowballing out of control and can lead to eviction or repossession and ultimately homelessness. Every two minutes someone in Britain faces the nightmare of being attacked in the pub carpark or in their own home. We urge every single one of these people now relying on credit to help pay their rent or mortgage to urgently seek advice."
A grim document
12 hours ago
3 comments:
When are people going to understand that we stand together or fall against ***
*** insert whatever
"Martin Lewis of MoneySavingExpert.com, said Shelter's findings were 'The UK is the crock of gold at the end of the rainbow for the world's payday lenders,' explained Martin Lewis of MoneysavingExpert.com.
'They've been regulated out of other countries and jump for joy at our lax supervision. That's why these 4,000% APR lenders are exploding across British high streets."
If Martin Lewis thinks they're such a bad deal, why doesn't he set up a company providing cheap, short-term loans, undercut them and get rich?
I'll tell you why: because he can't. A large part of borrowing short term is the fees. Someone having to take your application, check some details with credit agencies, make sure you aren't money laundering. It all costs, and I reckon Wonga charge about £6 for that. So, borrow £200 over 2 days, and you'll pay a couple of quid in interest, but you also pay about £6 in fees. But because APR is based on typical loan term, and Wonga are short-term lenders that turns into a loan of £8 on £200 (or about 4%) that is capitalised every 4 days.
Payday loans have the potential to be a victory for the naive 3rd sector do-gooders with the disastrous consequences of poor people turning to loan sharks.
Many years ago, I wanted to borrow £1K for my business to buy some computer kit. It worked out much cheaper to take out a credit card and buy the kit on that than it was to borrow the money from the bank, because the credit card company wanted my business and didn't charge any fees. The credit card interest rate was twice that the bank was charging, IIRC.
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