Payday loan advertising should be banned!

[Isabelle]

I don't understand it, so people borrow money on the pretense that they get payed and give it back to them with interest.it seems a silly thing to do to me as you never will get away from it as the next week you are even more skint as you have to pay it back plus interest..doesn't make sense to me,its never ending no wander people get in dept, the pay day industry just profits on peoples misery.

 

Exactly. If someone is on a fixed income how are they going to be able to afford to pay the interest/ charges without falling short before the next payday? I agree that these loans serve a purpose, but I think it is likely that the people who use them to their advantage i. e. paying the loan off in full on time and not need to use them again, are in the minority.

[FACEBOOK]

I don't think you guys are being very fair. Wonga employ a whole team of debt collectors in a call centre to harass all their late and non payers, you wouldn't want them to lose their jobs would you? Well that's what would happen if payday lenders weren't allowed to charge such tragic interest rates for those who don't pay on time. So at least some positivity comes from the industry for those employed in the debt collection department. I wonder if Wonga ban all debt collection employees from taking out payday loans with the company, otherwise they might have to harass and collect from their colleague sat next to them. Online payday lending is a genius business model and for that reason alone has my full respect.

[GLASGOWOODS]

Capping the rates would just mean the firms not lending to the highest risk borrowers, which would then force those people into the waiting arms of illegal loansharks. As bad as you may think them, wonga.com never broke anyone's kneecaps for not paying their money back.

 

I agree that advertising these firms should be, if not banned, severly restricted and not made to look attractive in any way.

 

They may not have knee capped anyone,but people do commit suicide when they feel the intense pressure these companies may put on them.

[Happ Hazzard]

They may not have knee capped anyone,but people do commit suicide when they feel the intense pressure these companies may put on them.

What do you suggest the companies do when people borrow money from them and then don't pay it back?

[GLASGOWOODS]

What do you suggest the companies do when people borrow money from them and then don't pay it back?

 

Obviously try and get their money back.But,within the guidlines set out by the "financial conduct authority" (think that's right??)

But they don't always adhere to their codes.

[chem1st]

Capping the rates would just mean the firms not lending to the highest risk borrowers, which would then force those people into the waiting arms of illegal loansharks. As bad as you may think them, wonga.com never broke anyone's kneecaps for not paying their money back.

 

I agree that advertising these firms should be, if not banned, severly restricted and not made to look attractive in any way.

 

I'm not sure that it would force people into the hands of illegal loansharks. But I can see your reasoning and fear of driving people into the hands of illegal loan sharks.

 

An example would be a friend of mine, who doesn't use unsecured payday loans, but does use the pawn shop equivalent.

 

I'm sick of him being ripped off, so will lend him money interest free, and take his goods as a 'deposit'. I'm not bothered about having his goods as a deposit, but when I've lent him interest free, without 'deposit', he will still go and lend money from the pawn shop using said 'deposit'. Which defeats the purpose of me lending him money interest free.

 

If he couldn't get the loans, he would soldier through and manage as he did before they became available to him.

 

The availability of high interest loans, be they secured or unsecured seems to be a big reason why people use them, it's easy to get a bit of money, and then make yourself poorer, next month/fortnight/week.

 

If you capped Wonga et al. to an interest rate of 2000% APR I'm sure they would continue to issue loans to high risk borrowers and make a profit. I wonder at what point it would no longer be profitable for them to do this...

[Chris_Sleeps]

Capping the rates would just mean the firms not lending to the highest risk borrowers, which would then force those people into the waiting arms of illegal loansharks.

Argumentum ad extremum.

 

High risk borrowers can also use credit unions, which neither put people in severe debt nor smash their kneecaps.

[Happ Hazzard]

But you have to save with a credit union for a certain amount of time first, you can't just decide one day to borrow money and have it in your account within a few hours like you can with wonga etc. I don't think many of the people who resort to payday loans have the foresight and patience to use credit unions anymore than they do to save in the first place.

[willman]

Argumentum ad extremum.

 

High risk borrowers can also use credit unions, which neither put people in severe debt nor smash their kneecaps.

 

No but some "offer" to let you pay in all your benefit into your loan account then deduct their payment before allowing you access to your money.

 

I admit they don't charge high interest or break your knees but they do insist on being paid.

[Chris_Sleeps]

But you have to save with a credit union for a certain amount of time first

Not anymore.

No but some "offer" to let you pay in all your benefit into your loan account then deduct their payment before allowing you access to your money.

Nobody is forced to accept this. They can still bank on their own.

... but they do insist on being paid.

A wise business plan.

 

I'm not even arguing for Credit Unions to exist instead of Payday loans. I was just pointing out that Happ Hazzard's argument was extreme - it isn't a dichotomy between expensive credit and illegal credit. There are cheaper options.

 

What I would do is put my voice behind chem1st - Britain needs usury laws.

 

I knew someone who I used to work with who borrowed from Wonga, and his finances were in a mess. He couldn't get them back on track because he was trying to service his debts. He'd borrow and then not be able to pay it back, and Wonga would be nice about it and extend their loan, but obviously that came with a cost. The next month, my friend was back in the same boat. I've left the job now, but without a real windfall I assume he is still balancing his books month by month. Lose his job and he's got DRO written all over him.

 

----

 

I've posted this before, but it's great so I'll do it again.

 

"Why Britain Needs Usury Laws"

 

In some ways it is too easy to look to regulating the loan companies, when the bigger issue is the culture of debt that creates the market for their services in the first place. There’s a need for debt counseling, free financial advice, and education on budgeting. And that brings us up against an even bigger problem – personal debt is great for the economy and is an easy way to prop up GDP. The government will hesitate to do anything to discourage it, no matter how predatory it becomes.