stressconsul Posted November 18, 2011 Share Posted November 18, 2011 The BBC reports that upto 40,000 people in Sheffield are trapped in debt. http://www.bbc.co.uk/news/uk-england-south-yorkshire-15778400 Should interest rates charged by loan sharks be capped so these people don't get into worse trouble? Link to comment Share on other sites More sharing options...
Chris_Sleeps Posted November 18, 2011 Share Posted November 18, 2011 Loan sharks are illegal. Interest rates on doorstep lending is the one that Look North were addressing yesterday. Link to comment Share on other sites More sharing options...
Mecky Posted November 18, 2011 Share Posted November 18, 2011 Loan sharks are illegal. Interest rates on doorstep lending is the one that Look North were addressing yesterday. Oh so that's why they're always advertising on TV then Link to comment Share on other sites More sharing options...
Chris_Sleeps Posted November 18, 2011 Share Posted November 18, 2011 Oh so that's why they're always advertising on TV then A bloke going around an estate lending cash out and getting large interest returns, smashing kneecaps in when he isn't paid; that is a loan shark. He is an illegal money lender and if anyone is doing this then contact the police. Going around and selling financial services, with a contract, with an organisation that is regulated by the FSA; they aren't loan sharks. I'm sub-titling this post "a Friday morning education". Edit; I should add that the journalism in the BBC article is awful. On Look North, Professor Paul Mosley referenced loan sharks and doorstep lending as expensive credit, and that has been boiled down to use "loan shark" as a catch-all term. Very sloppy journalism. Link to comment Share on other sites More sharing options...
quisquose Posted November 18, 2011 Share Posted November 18, 2011 Furthermore, in support of C_S's posts, Cattles were so "extortionate" that they went bust. Link to comment Share on other sites More sharing options...
L00b Posted November 18, 2011 Share Posted November 18, 2011 Should interest rates charged by loan sharks be capped so these people don't get into worse trouble?Many countries have been doing so by Statute for decades, if not longer. In France, this is known as the usury rates (or thresholds), i.e. the maximum credit rates chargeable by type of loan and amount. These are set quarterly (used to be annually) by Decree. Currently maximum rate is 21.03%. Charging any higher rate (depending on loan type/amount) is automatically illegal, regardless of whether it's a loan shark, a bank, credit card provider, finance house, retailer, etc. This has always struck me as a good idea (amongst others) to protect people unable to understand money. However, considering the history of financial services in the UK, I can understand how and why this kind of measure would be fought off tooth and nail by the City Link to comment Share on other sites More sharing options...
quisquose Posted November 18, 2011 Share Posted November 18, 2011 Having read the article, my interpretation is that 40,000 are trapped by debts they have already run up with established lenders, who are now unwilling to lend anymore. Some of them, a small percentage, are foolishly considering the "services" of loan sharks. The real lesson here is to never take out a loan that you cannot comfortably pay off, even when considering the worse case scenario. A loan on a car or house can usually be extinguished by the sale of those assets if needed. Loans for holidays, mobiles, televisions, household items and credit card bills, and you're buggered. Trapped in spiralling debt in fact. Link to comment Share on other sites More sharing options...
Chris_Sleeps Posted November 18, 2011 Share Posted November 18, 2011 In France, this is known as the usury rates (maximum credit rates chargeable by type of loan) and they are capped by Decree I've understood this to be about 133% APR (wiki-fr), which is massively under what Doorstep Loan companies offer, and make Payday Loans look like financial madness. Link to comment Share on other sites More sharing options...
L00b Posted November 18, 2011 Share Posted November 18, 2011 I've understood this to be about 133% APR (wiki-fr), which is massively under what Doorstep Loan companies offer, and make Payday Loans look like financial madness.It's not 133% APR, Chris It's 133% of the average (APR-) rate practised in the previous quarter by credit providers for a same operation with the same risks (translated the Wiki sentence, thx for the link btw). So, e.g. 6% APR x 1.33 = 7.98% APR Note that I'm not sure if "133% of" means the average rate (100%) plus 33%, or the average rate plus 133% (which in my example would be x2.33, giving a usury threshold of 13.98% instead) The table (in French) in my earlier link (official source) contains the pre-calculated rates (average rate @ 133%), which are per the graph in your link. <...>make Payday Loans look like financial madness.Which it is, regardless of any comparison with other countries' practices. Personally, I consider this and similar companies to be on an equal footing with loan sharks, all legal and 'squeaky clean' that they may be. They are just preying on the precarious. Places like Bright House, Crazy George and the like aren't far behind (again, IMHO). Link to comment Share on other sites More sharing options...
Chris_Sleeps Posted November 18, 2011 Share Posted November 18, 2011 So, e.g. 6% APR x 1.33 = 7.98% APR That can't be correct. France has credit resources at around 20-21%. wiki-fr (For L00b, so he doesn't have to follow my link; Le TEG - autrement dit, le taux effectif global - varie est souvent de l'ordre de 20 %, (le taux d'usure étant souvent de l'ordre de 21%)) Link to comment Share on other sites More sharing options...
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