Pay Day Loans = Legallised Loan Sharks...?
Discussion
Soovy said:
DonkeyApple said:
Soovy said:
menguin said:
I've used one of these companies two or three times before. I'm not hard up on cash, just have an abysmal credit rating due to past stupidity.
I used it to purchase some flights that I needed to buy before payday, which was around 7-10 days away, and it was a useful service. I was willing to pay, and was aware of, the (comparatively) insane interest rates for the convenience and lack of other alternatives I had. The last time I used them was around a year ago. I've since been more sensible with finances, and now have other backups should I need them - and savings to boot.
When I used the service I could easily have spent all my money the next month and had to use them again to buy food - but I didn't. I pulled my belt in for a month, didn't buy any unnecessary watches/torches as a result of PH browsing and subsequently didn't need to borrow any more money the month after.
As with all services, it is not down to the provider, but the user, to ensure they are used sensibly and within their means.
Some common sense at last. Thread ends.I used it to purchase some flights that I needed to buy before payday, which was around 7-10 days away, and it was a useful service. I was willing to pay, and was aware of, the (comparatively) insane interest rates for the convenience and lack of other alternatives I had. The last time I used them was around a year ago. I've since been more sensible with finances, and now have other backups should I need them - and savings to boot.
When I used the service I could easily have spent all my money the next month and had to use them again to buy food - but I didn't. I pulled my belt in for a month, didn't buy any unnecessary watches/torches as a result of PH browsing and subsequently didn't need to borrow any more money the month after.
As with all services, it is not down to the provider, but the user, to ensure they are used sensibly and within their means.
Does it enable you to guarantee a positive return if a new client only does one trade, then leaves?
Does this mean it is good business practice to ensure a client keeps coming back?
How do you ensure as many clients as possible repeat deal?
What stops you from going too far in this action?
If a client joined and did one trade and then left, undoubtedly we would not go anywhere near making enough of a commission to cover the "average recuruitment cost per new customer" figure.
The key is that you have to market to clients in order to reduce as much risk of not clearing break even as possible, but at the same time regulation exists to ensure that this is fair. You probably know about one firm's FinProm issue of late.
I'm not sure, having now looked at the governance of these payday firms, that there are any credible protections to reduce the potential and strong incentives to trigger a debt spiral on a client.
Soovy said:
menguin said:
I've used one of these companies two or three times before. I'm not hard up on cash, just have an abysmal credit rating due to past stupidity.
I used it to purchase some flights that I needed to buy before payday, which was around 7-10 days away, and it was a useful service. I was willing to pay, and was aware of, the (comparatively) insane interest rates for the convenience and lack of other alternatives I had. The last time I used them was around a year ago. I've since been more sensible with finances, and now have other backups should I need them - and savings to boot.
When I used the service I could easily have spent all my money the next month and had to use them again to buy food - but I didn't. I pulled my belt in for a month, didn't buy any unnecessary watches/torches as a result of PH browsing and subsequently didn't need to borrow any more money the month after.
As with all services, it is not down to the provider, but the user, to ensure they are used sensibly and within their means.
Some common sense at last. Thread ends.I used it to purchase some flights that I needed to buy before payday, which was around 7-10 days away, and it was a useful service. I was willing to pay, and was aware of, the (comparatively) insane interest rates for the convenience and lack of other alternatives I had. The last time I used them was around a year ago. I've since been more sensible with finances, and now have other backups should I need them - and savings to boot.
When I used the service I could easily have spent all my money the next month and had to use them again to buy food - but I didn't. I pulled my belt in for a month, didn't buy any unnecessary watches/torches as a result of PH browsing and subsequently didn't need to borrow any more money the month after.
As with all services, it is not down to the provider, but the user, to ensure they are used sensibly and within their means.
menguin said:
NoNeed said:
menguin said:
didn't buy any unnecessary watches/torches as a result of PH browsing.
I did believe you right upto this point.
I know that isn't possible.
Every month I promise myself I will begin a new phase, a paired-down existence, not dependent on acquiring yet more mancrap which can be held against me by Mrs Digga when our monthly bank statement arrives (and the inevetable inquest into why we aren't saving MORE is launched) and every month I fail, despite best intentions.The candour of your intial post is commendable. Sadly, most of these loans won't go to people who accept blame or responsibility for their finances, much less show the sort of sacrifice you did in manouevering your way out of the debt.
Fatman2 said:
I can see both sides of this.
I'm all for self discipline and accountability but this should work on both sides. You simply cannot dangle irresistible carrots in front of people and then wash your hands because someone has taken the bait.
Business is largely about the manipulation of human psychology to either dupe, coerce or entice people to part with their cash and the financial market is no different.
Yes we are accountable for our actions but it takes two to have an affair (so to speak).
Which is all well and good but where does the obvious principle established in the regulation which would come out of agreeing with the above lead? I'm all for self discipline and accountability but this should work on both sides. You simply cannot dangle irresistible carrots in front of people and then wash your hands because someone has taken the bait.
Business is largely about the manipulation of human psychology to either dupe, coerce or entice people to part with their cash and the financial market is no different.
Yes we are accountable for our actions but it takes two to have an affair (so to speak).
No more pictures of cartoon characters on sweets or Happy Meals?
No more amusing (ish!) Carlsberg or WKD adverts?
Removal from all chippy's of the Pukka Pies posters of the sophisticated woman in the Jaguar!
Ultimately horses can be led to water they do still however have a choice as to whether or not they drink!
heppers75 said:
Fatman2 said:
I can see both sides of this.
I'm all for self discipline and accountability but this should work on both sides. You simply cannot dangle irresistible carrots in front of people and then wash your hands because someone has taken the bait.
Business is largely about the manipulation of human psychology to either dupe, coerce or entice people to part with their cash and the financial market is no different.
Yes we are accountable for our actions but it takes two to have an affair (so to speak).
Which is all well and good but where does the obvious principle established in the regulation which would come out of agreeing with the above lead? I'm all for self discipline and accountability but this should work on both sides. You simply cannot dangle irresistible carrots in front of people and then wash your hands because someone has taken the bait.
Business is largely about the manipulation of human psychology to either dupe, coerce or entice people to part with their cash and the financial market is no different.
Yes we are accountable for our actions but it takes two to have an affair (so to speak).
No more pictures of cartoon characters on sweets or Happy Meals?
No more amusing (ish!) Carlsberg or WKD adverts?
Removal from all chippy's of the Pukka Pies posters of the sophisticated woman in the Jaguar!
Ultimately horses can be led to water they do still however have a choice as to whether or not they drink!
DonkeyApple said:
The JobCentre?
I understand what you are saying but at the same time it can be argued that the system is just facilitating and increase in the feckless.
The reality is that you can never save everyone from themselves or their situation but you can cripple yourself trying. As a society you need to draw a line in the sand and I would argue that it is way too low at present.
I think you misunderstand me. I am arguing for these companies to remain in business, they provide a needed service. People, even feckless ones should be allowed to f/up and HAVE to take responsibility for their actions. If a lender makes too many bad lending decisions, it goes bust. So both sides take responsibilty for their decisions and we the regularly mugged taxpayer aren't having to pick up the tab.I understand what you are saying but at the same time it can be argued that the system is just facilitating and increase in the feckless.
The reality is that you can never save everyone from themselves or their situation but you can cripple yourself trying. As a society you need to draw a line in the sand and I would argue that it is way too low at present.
Fatman2 said:
Absolutely! I agree but I think it's more 50/50 than the hard liners on here would like to think. I'm not saying that these things need to be done away with. I don't know what the solution is to be honest as I'm just not that bright LOL. However to put all the blame onto the individual is a bit harsh when the essence of business is marketing and these guys are very clever.
The trouble is that some of us have skewed opinions on this particular sort of product as we have experience of the type of people who tend to operate them and what their drivers are.When it comes to selling financial products to the retail market it isn't a level playing field and many consumers simply don't stand a chance of a fair deal or treatment if they end up in the grasps of some of the more renowned individuals.
Fatman2 said:
heppers75 said:
Fatman2 said:
I can see both sides of this.
I'm all for self discipline and accountability but this should work on both sides. You simply cannot dangle irresistible carrots in front of people and then wash your hands because someone has taken the bait.
Business is largely about the manipulation of human psychology to either dupe, coerce or entice people to part with their cash and the financial market is no different.
Yes we are accountable for our actions but it takes two to have an affair (so to speak).
Which is all well and good but where does the obvious principle established in the regulation which would come out of agreeing with the above lead? I'm all for self discipline and accountability but this should work on both sides. You simply cannot dangle irresistible carrots in front of people and then wash your hands because someone has taken the bait.
Business is largely about the manipulation of human psychology to either dupe, coerce or entice people to part with their cash and the financial market is no different.
Yes we are accountable for our actions but it takes two to have an affair (so to speak).
No more pictures of cartoon characters on sweets or Happy Meals?
No more amusing (ish!) Carlsberg or WKD adverts?
Removal from all chippy's of the Pukka Pies posters of the sophisticated woman in the Jaguar!
Ultimately horses can be led to water they do still however have a choice as to whether or not they drink!
Puts me in mind of the words of Pastor Martin Niemöller which have often been co-opted for various causes when it has come to banning things or over regulation but in the original are......
First they came for the communists,
and I didn't speak out because I wasn't a communist.
Then they came for the trade unionists,
and I didn't speak out because I wasn't a trade unionist.
Then they came for the Jews,
and I didn't speak out because I wasn't a Jew.
Then they came for the Catholics,
and I didn't speak out because I was Protestant.
Then they came for me
and there was no one left to speak out for me.
heppers75 said:
Most of your posts make sense as a rule but I have to side with a few of the chaps here in that if you have a Tax bill of £10k then you must have had the earnings to go with it and you have always seemed like a sensible and normal chap to me so not knowing it was coming seems a bit out of kilter.
My problem was that I got hit by a penalty for a mistake that was not of my making. The 'error', if indeed there was one, was made when I was quite ill. I am unable to find out whose error it was. I made no claim for anything extra and merely left it up to my employer to do the necessary. Further, I was hit by a tax bill of 50% of what I am predicted to earn this coming year by 31st of Jan and then the remainder by 31st July. This because I missed some target date that wasn't publicised. The £10k includes the bit for the 31st July.
The reasons the size of the bill came out of the blue are that a/ for some reason I was been given a rebate when the tax office discovered I had paid them too much to then having to repay this because the tax office had found they had made a mistake, wanted the money back as well as the same amount again, and b/ that the deadline I missed, which I am still unable to discover anywhere on the HMRC website but then neither of the two tax officials I spoke to about it were unable to as well, made this coming year's tax payable in advance.
I expected to pay one year's tax but I have ended up paying two years' as well as having to pay back money that they said they owed me and that I actually asked them to check to ensure it was right.
Some people might feel that there is a certain coincidence with the fact that the amount charged was double that of the original bill. Others might believe is was doubled as some sort of fine. I know that originally I was treated as if it was me who had put in the claim for a rebate or had under-reported my income. Once I clarified this the explanation changed a bit. But then, who can say?
As it turns out I can afford to pay the sum as one lump but that was of little concern to the tax office.
I have never claimed too much tax allowance to my knowledge. In fact, I have since found that I don't claim the full amount. This (the latter) will change from now on.
So you can see why I am a little irritated. This could happen to anyone. My records are not fully complete for the time. This is down to me. As I say, I was ill for some years and record keeping was not my first priority. However, it appears possible that the doubling of the tax repayment is as some sort of penalty. I was initially told that I should have checked when I got the rebate, it being my responsibility to do so. When they were told that in fact I did, with date, day, time and person (although not their real name I assume) their attitude did change and there was talk of checks being made and information being given to me. Alas this was not the case.
I feel that someone was out of kilter. That was the person who decided I had paid too much tax. Then there is the person who doubled the sum for a very strange reason, at least according to them. Oh, and then there's the one who invented this strange, and very secret it would appear, deadline that no one knows about.
I can be wrong and this might be a result of extremem irritation, but my feeling is that this strange deadline is the easy excuse by the person who knows why I am forced to pay my tax in advance but didn't want to say. I reckon it is some form of punishment for believing the tax office when they said I was entitled to a rebate as well as not checking more than once that I was entitled to it.
It strikes me that it is almost as if the tax office is working to targets. But they wouldn't do that, would they.
Derek Smith said:
heppers75 said:
Most of your posts make sense as a rule but I have to side with a few of the chaps here in that if you have a Tax bill of £10k then you must have had the earnings to go with it and you have always seemed like a sensible and normal chap to me so not knowing it was coming seems a bit out of kilter.
My problem was that I got hit by a penalty for a mistake that was not of my making. The 'error', if indeed there was one, was made when I was quite ill. I am unable to find out whose error it was. I made no claim for anything extra and merely left it up to my employer to do the necessary. Further, I was hit by a tax bill of 50% of what I am predicted to earn this coming year by 31st of Jan and then the remainder by 31st July. This because I missed some target date that wasn't publicised. The £10k includes the bit for the 31st July.
The reasons the size of the bill came out of the blue are that a/ for some reason I was been given a rebate when the tax office discovered I had paid them too much to then having to repay this because the tax office had found they had made a mistake, wanted the money back as well as the same amount again, and b/ that the deadline I missed, which I am still unable to discover anywhere on the HMRC website but then neither of the two tax officials I spoke to about it were unable to as well, made this coming year's tax payable in advance.
I expected to pay one year's tax but I have ended up paying two years' as well as having to pay back money that they said they owed me and that I actually asked them to check to ensure it was right.
Some people might feel that there is a certain coincidence with the fact that the amount charged was double that of the original bill. Others might believe is was doubled as some sort of fine. I know that originally I was treated as if it was me who had put in the claim for a rebate or had under-reported my income. Once I clarified this the explanation changed a bit. But then, who can say?
As it turns out I can afford to pay the sum as one lump but that was of little concern to the tax office.
I have never claimed too much tax allowance to my knowledge. In fact, I have since found that I don't claim the full amount. This (the latter) will change from now on.
So you can see why I am a little irritated. This could happen to anyone. My records are not fully complete for the time. This is down to me. As I say, I was ill for some years and record keeping was not my first priority. However, it appears possible that the doubling of the tax repayment is as some sort of penalty. I was initially told that I should have checked when I got the rebate, it being my responsibility to do so. When they were told that in fact I did, with date, day, time and person (although not their real name I assume) their attitude did change and there was talk of checks being made and information being given to me. Alas this was not the case.
I feel that someone was out of kilter. That was the person who decided I had paid too much tax. Then there is the person who doubled the sum for a very strange reason, at least according to them. Oh, and then there's the one who invented this strange, and very secret it would appear, deadline that no one knows about.
I can be wrong and this might be a result of extremem irritation, but my feeling is that this strange deadline is the easy excuse by the person who knows why I am forced to pay my tax in advance but didn't want to say. I reckon it is some form of punishment for believing the tax office when they said I was entitled to a rebate as well as not checking more than once that I was entitled to it.
It strikes me that it is almost as if the tax office is working to targets. But they wouldn't do that, would they.
I do think though, and it is an assumption but I feel a valid one, a vast majority of the folks using these services are not in a situation even remotely akin to yours above (which I sympathise with BTW!) but are just people who want more than they can afford to have.
heppers75 said:
Fair comment, I have to be honest despite my best efforts I have long since given up trying to understand the machinations of our beloved HMRC and have a pretty decent and trusted accountant to whom I pay a not so inconsiderate sum to perform that understanding for me and I strongly suspect that he has saved me over the years more than he has cost me!
I do think though, and it is an assumption but I feel a valid one, a vast majority of the folks using these services are not in a situation even remotely akin to yours above (which I sympathise with BTW!) but are just people who want more than they can afford to have.
Thanks for that. I have to admit to wanting more than I can afford. Mind you, for the next year or so I will have less that I used to be able to afford. We were off to the Amalfi coast this year but I had to cancel because of a full witness order. We were going to put it back to September but that looks a bit iffy now.I do think though, and it is an assumption but I feel a valid one, a vast majority of the folks using these services are not in a situation even remotely akin to yours above (which I sympathise with BTW!) but are just people who want more than they can afford to have.
I'm told that an accountant cannot say that he will save you more than he will cost, nor that if he cannot do so he will not charge. So there's no 'no win, no fee'. Shame. A percentage of savigns seems to me to be a great incentive for them to do their best for you. That bloke who did Vodaphone's accounts must be quite bitter.
Sounds like payments on account to me - are you self employed (in part or in full?). The whole taxation system is over complex...I use a decent accountant to steer me through it.
Even then I ended up getting stiffed for 1,800 quid by HMRC a while ago because they had my tax code wrong and insisted I owed interest (their fallback position is that no matter how often you might write to them, how behind they are on reading their post etc etc, it is down to the individual to know what they should be paying). It's possible to take them to court, but for those sort of amounts hardly worthwhile. Ironically they're doing it again now, but am ready for it this time!
Even then I ended up getting stiffed for 1,800 quid by HMRC a while ago because they had my tax code wrong and insisted I owed interest (their fallback position is that no matter how often you might write to them, how behind they are on reading their post etc etc, it is down to the individual to know what they should be paying). It's possible to take them to court, but for those sort of amounts hardly worthwhile. Ironically they're doing it again now, but am ready for it this time!
DonkeyApple said:
The trouble is that some of us have skewed opinions on this particular sort of product as we have experience of the type of people who tend to operate them and what their drivers are.
When it comes to selling financial products to the retail market it isn't a level playing field and many consumers simply don't stand a chance of a fair deal or treatment if they end up in the grasps of some of the more renowned individuals.
DA in my opinion this kind of product is very different in nature from the likes of pensions, insurance and mortgages. For these products it's very easy for a person to be sold a product that they do not understand. When it comes to selling financial products to the retail market it isn't a level playing field and many consumers simply don't stand a chance of a fair deal or treatment if they end up in the grasps of some of the more renowned individuals.
The payday loan product is very simple by comparison. The website very clearly states the amount, fee and due date - there is very little to the product other than this.
I was asked to apply for a job at Wonga in their early days. They are very careful to ensure their customers understand exactly what the cost and repayment requirements are, and their internal research shows their customers both understand the costs, and are happy with the service. In the end I didn't go for the job as it happens.
I would not like to ban these companies for a misguided sense of paternalism as they provide a useful service. However, I would support the following changes:
1) Personal finance education in schools, including what to do it you find yourself in trouble.
2) Extra finding for the citizens advice service and CCCS to fund and advertise their debt counselling.
3) an additional page during the payday loan application process stating other options if borrowing is getting out of hand (eg numbers of debt advisory services, websites).
0a said:
1) Personal finance education in schools, including what to do it you find yourself in trouble.
2) Extra finding for the citizens advice service and CCCS to fund and advertise their debt counselling.
3) an additional page during the payday loan application process stating other options if borrowing is getting out of hand (eg numbers of debt advisory services, websites).
To that I'd add an automatic referral to a debt advisory service when a punter 'rolls over' a set number of times as this seems to be the biggest problem with these arrangements - over a short period of time the rates are within reason, but added up and compounded over a number of months, it's easy to see how the reckless/feckless get into more trouble than they bargained for.2) Extra finding for the citizens advice service and CCCS to fund and advertise their debt counselling.
3) an additional page during the payday loan application process stating other options if borrowing is getting out of hand (eg numbers of debt advisory services, websites).
0a said:
DA in my opinion this kind of product is very different in nature from the likes of pensions, insurance and mortgages. For these products it's very easy for a person to be sold a product that they do not understand.
The payday loan product is very simple by comparison. The website very clearly states the amount, fee and due date - there is very little to the product other than this.
I was asked to apply for a job at Wonga in their early days. They are very careful to ensure their customers understand exactly what the cost and repayment requirements are, and their internal research shows their customers both understand the costs, and are happy with the service. In the end I didn't go for the job as it happens.
I would not like to ban these companies for a misguided sense of paternalism as they provide a useful service. However, I would support the following changes:
1) Personal finance education in schools, including what to do it you find yourself in trouble.
2) Extra finding for the citizens advice service and CCCS to fund and advertise their debt counselling.
3) an additional page during the payday loan application process stating other options if borrowing is getting out of hand (eg numbers of debt advisory services, websites).
You'd be amazed at the 'marketing' and 'cross selling' techniques that are used. These systems have been extremely well honed to prey on the dreams of the weak. The payday loan product is very simple by comparison. The website very clearly states the amount, fee and due date - there is very little to the product other than this.
I was asked to apply for a job at Wonga in their early days. They are very careful to ensure their customers understand exactly what the cost and repayment requirements are, and their internal research shows their customers both understand the costs, and are happy with the service. In the end I didn't go for the job as it happens.
I would not like to ban these companies for a misguided sense of paternalism as they provide a useful service. However, I would support the following changes:
1) Personal finance education in schools, including what to do it you find yourself in trouble.
2) Extra finding for the citizens advice service and CCCS to fund and advertise their debt counselling.
3) an additional page during the payday loan application process stating other options if borrowing is getting out of hand (eg numbers of debt advisory services, websites).
There is a side of me that says screw them for being such fools but if you spend any time in this intriguing world of high pressure soft selling you begin to see that many of these firms are just nothing short of evil.
About 11 or so years ago certain groups of people began attending various courses in Florida and Nevada that taught them how to sell the dream to mugs.
This was all the start of the various get rich quick schemes we are all familiar with. The property seminars, the learning to trade courses. But it also spread into pre existing areas like the bucket broker shops which overnight with the US education and often US firms backing them shifted up into a new league.
Behind all of these businesses are the same old faces very often.
I would put money on drilling down into ultimate ownership of some of these pay day firms and finding some familiar names.
These areas differ from conventional retail investment due to lower and in some cases zero regulation.
Even when these people go too far and get caught there are very low penalties and often they will move overseas and sell into the UK market from there.
You are right that most of these pay day firms follow the light regulation and publish numbers etc very clearly but it is the incideous marketing and second line sales which are the issue and will probably be halted once these firms come under the remit of the proposed replacement for the FSA.
Said it before and I'll say it again. Why can't the Government offer this service?
If a private company can make a profit doing this then the G'ment could do the same.
Most on this thread seem to think the majority of customers are on benefits. If so the G'ment could use their benefits as security.
Everybody is happy no?
If a private company can make a profit doing this then the G'ment could do the same.
Most on this thread seem to think the majority of customers are on benefits. If so the G'ment could use their benefits as security.
Everybody is happy no?
dickymint said:
Said it before and I'll say it again. Why can't the Government offer this service?
If a private company can make a profit doing this then the G'ment could do the same.
Most on this thread seem to think the majority of customers are on benefits. If so the G'ment could use their benefits as security.
Everybody is happy no?
I think it's because it's not the loan that makes a fortune. It does present a healthy return but at anywhere near where the people end up after missing a payment. I read somewhere last year(ish) maybe even on here that the charges and interests once payments are missed go through the allready very high roof.If a private company can make a profit doing this then the G'ment could do the same.
Most on this thread seem to think the majority of customers are on benefits. If so the G'ment could use their benefits as security.
Everybody is happy no?
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