Old Style Loan Sharks...

[sandyRoe]

Inspired by posts on Payday Loans. If you borrowed a tenner and repaid the loan with 10 weekly payments of £1.30 what interest were you being charged?

[anneasquith]

sandy..........your giving me a headache. :)

[sandyRoe]

Ibuprofene 400 mg is said to be a panacea. :-)
The old loan sharks were squalid back street operators. Now they're plastered all over the television.

[starone]

Don't know, but it seems like a hell of a lot. It would be £3 extra, which is almost a third of the original £10. but I think there is a different way of working it out and it is usually for the year.

[eastern]

Aren't their rates in the thousands of percent? I read somewhere it was 4750%. How on this Earth do Wonga and the rest get away with it, as you say I thought old style loan sharks who prayed on the vulnerable in society were stopped but Oh No they are coming to a TV advert near you, and remember use the discount code to get a reduction to 3750%! Typical government will look into it for a year hand their findings to some government "johnny" who will also sit on it for another year and then declare that they should "watch what their doing or they will be regulated" The bar stewards should be shut down immediately!

[andy-hughes]

The problem is, the individuals who need this last-cnahce line of credit are those who do not understand the way compound interest works.

Even though the companies are obliged to declare their outrageous interest rates in their adverts, they are clever enough to dress the deal up with a light-hearted ad that is a million miles away from the cold hard cash they are extracting from vulnerable people by legal, if not precisely moral means.

They should all be shut down tomorrow - if a reputable lending source chooses not to advance you the money, it is because you are assessed as a bad risk for whatever reason. Falling into the arms of legalises Shylocks simply compounds the problem

[daffy654]

http://blog.moneysavingexpert.com/2011/09/21/fact-borrowing-100-at-wongas-apr-costs-more-than-the-us-national-debt-over-14-trillion-after-7-years/

[lankeela]

As someone who has frequently used Wonga loans recently I suggest you all actually check out the repayments - most people who *** them off don't even know what they charge - I find them convenient and reasonable for the service they provide which is a short term loan. If you worked out the percentages on credit card repayments they are horrendous and yet I don't see anyone slagging them off. Its not their fault if people don't repay when they say they will.

[daffy654]

If you have to regularly use their services it is probably because you have been left short for the month due to having to pay them back. That is the issue most sane and sensible people have with pay day loan companies, once you get into their clutches it is very difficult to get free of them.

[lankeela]

Example borrow £50 for ten days - repay £60-97 (less about a fiver discount if you use a promo code) so I don't think thats unreasonable. If a mate lent me £50 I would give them a tenner for doing so.

[lankeela]

I use them if I have an unexpected bill as recently when I needed a new battery on my van which I had budgeted for - then found out it actually needs two!

[sandyRoe]

The problems arise when people borrow and find they can't afford to repay the loan as promised. They find themselves in a quicksand of debt.

[daffy654]

I would never give a mate a tenner extra or expect that if I was the one who loaned the cash.

A £97 (your top est.) repayment on a £50 loan is almost double.

The problems really come when you borrow larger amounts, say £350 and have to pay back £450 the following month, that then leaves you very short for the month and you have to borrow again... and the vicious circle goes on and on month after month.

[aelmpvw]

if i lent a mate £50 i would expect £50 back

[eastern]

"Never a lender or a borrower be" saves being in debt to anyone. If I ain't got it I can't spend it.

[sandyRoe]

And the latest wheeze is to revive the use of the guarantor, as in Amigo loans. That'll test friendships.

[lankeela]

Daffy - get real - the repayment was sixty pounds and ninety seven pence not ninety seven pounds!

Peope know what the repayments are before borrowing so don't see why they moan. I am happy with the service as my poor credit score means I woud not get a loan or credit anywhere else and I only need it occasionally short term.

[daffy654]

your post said £60-97, that reads as £60 to 97 if it was meant to be £60.97 then you have yourself to blame for my misunderstanding of your post.

By the way, you really do come across as snappy and rude sometimes.

[lankeela]

Maybe thats because I get fed up of people who don't know the full facts before commenting. Use them or don't use them - thats up to individuals but I wanted to let people know the facts from someone who does use them and is quite happy with the service. Surely thats reasonable to get both sides of a story?

[hc4361]

APR doesn't work with short term loans. The APR rate is astronomical but the reality is if you pay your small loan back quickly you get charged very little.

[Prudie]

the answer to your OP is 30%