Some proposals allow credit of up to £500 to be obtained so in theory you could use a payday loan company. As in all cases though it should only be as a last resort and it would be better to speak to your IP and have a payment reduced or suspended.
Information from the Consumer Finance Association below.
"UNAUTHORISED BANK OVERDRAFT
Borrow 200 over 1 month (30 days at flat fee of 5 a day)
82,400.5%APR
Repay 350 after 1 month
Total Repaid: 350
YOU PAY BACK ONE AND THREE QUARTERS TIMES WHAT YOU BORROWED
The total interest cost is 75% of what you borrowed
SHORT TERM "PAYDAY" LOAN
Borrow 200 over 1 month
1,355.2%APR
Repay 250 after 1 month
Total Repaid: 250
YOU PAY BACK ONE AND A QUARTER TIMES WHAT YOU BORROWED
The total interest cost is 25% of what you borrowed
PUB LOAN
Borrow 25 over 1 week
5370.6%APR
Repay 25 after 1 week and buy a drink (cost 2)
Total Repaid: 27
YOU PAY BACK ONE AND TWO TWENTY FIFTHS TIMES WHAT YOU BORROWED
The total interest cost is 8% of what you borrowed
The pub loan is not a commercial proposition, just an arrangement between friends. But which of your friends would say: I should be delighted to lend you 25, but I fear I must charge you 5370.6%APR interest!"
I still stand by my comments that a payday loan is cheaper than an unauthorised overdraft.
Michael's People
why do the comparison over 1 mth, for the people that do that their isn't a problem, as I have stated before my concern is with the people who can't pay back they are the one's getting charged 1700% so the comparision against my arguement needs to be done over 6mts or a year.
People on this thread don't see where I am coming from, my concern isn't with the 95% who pay back after a month it's with the 5% that don,t.
Stewpot
Re your comment I was going to just laugh it away and put you down as stupid but i will comment as I do understand them and know exactly who they help and see a place for them but NOT AT 1700% in my time I have come across someone who couldn't repay after a month and they are in an awlful situation and went bankrupt because of it and lost out big time.
Skippy wrote:
If you read Andy's original post it's because the BBC are asking for case studies of people who have experience of feeling ripped off by loans.
They are hardly going to want to do an article interviewing people that are happy
It’s funny how a few years ago the whole market were screaming for alternative finance for those who for what ever reason couldn’t get loans/money from other sources
I agree with your points Canaries and realistically we are probably singing from the same hymn sheet. However, I do believe that there is unfairness when it comes to quoting APRs. Banks are not obliged to include their charges when quoting the APRs on authorised overdrafts so their figures are misleading. I have seen numerous clients have their wages swallowed up each month in charges and then incur a similar load the next month.
Surely, like anything in life there has to be some personal responsibility! With any credit agreement, be it a credit card or pay day loan, the law requires them to be up front. "Caveat Emptor" applies which is buyers beware. You do not have to sign up for any agreement. We seem to have gone completely off point. Pay day loans are till payday. If you think you wont be able to afford to repay it on payday dont get it!
Skippy
Fair comment, but I was a tad offended and will always fight my corner, I won't call stewpot stupid again I promise, hands up I apologize.
Michael's People
I fully agree, and glad we are singing from the same hymnsheet.
something needs to be done re excessive charges and excessive APR
and whilst people accept them as evidenced on this very thread they will continue, boy do i wish I was in a position to stop them charging silly amounts, don't get me wrong I see nothing seriously wrong with borrowing £200 and paying back £250 after a month, it's the bit if they can't pay after a month that's when the real problems start.
As others have pointed out, they do have a place if used responsibly. All loans are good when you have the funds to repay them, it's when you can't that you get into trouble, and that's the same regardless of the APR.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Hi
Payday loans are useful as explained above and are only intended for short term use. It becomes very expensive when they are continually "rolled over" and an even bigger problem when people take out multiple loans.
Payday loan companies need to have a system in place where Jo Public can't take out more than one or two at a time. I have a client who has nine and the payments due are more than her monthly take home pay.
Everyone has a right to their own view and we should be able to debate this without any personal comments in future please
Regards
No they don't. We don't see any posts until they are posted on the forum. If they are spam posts, unfair, insulting or just made by trouble makers (of which we have our fair share) they will be removed as soon as they are noticed by a moderator or the administrators.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
