Say no to 2356% APR loans

I am often inundated with requests from old school friends to join this and that group on Facebook. I don’t log in very often now – I’ve got a bit bored of reading updates about people’s online scrabble and mafia war scores – so I tend to accumulate a mass of them, from things like the ‘I love tea’ group to ‘I like scratching my back’ group etc (OK, so I made those up but you know what I mean!). Some of them I join, some I can’t be bothered to.

But there is one group I have just signed up to that I think everybody should join if they feel strongly about expensive credit. Ian Thomas, a brand consultant and blogger, has just started one called Let’s Stop 2356% APR Loans. He was so furious after seeing Quickquid’s TV advert for ‘payday’ loans at 2356 per cent typical APR that he started a protest group on the social networking site.

“I searched the web for any interest groups related to payday lenders and couldn’t find any,” he tells me. “It was the same at Facebook, so I set one up. It’s an issue that needed one. I know from personal experience that borrowing of this kind is a last resort. Often it is the absence of alternative sources of support like family, friends or banks – or simply because the social stigma of revealing their personal financial position is too embarrassing to contemplate for many people.”

Ian believes lenders are “exploiting” the misfortune of people who are struggling with their finances. “It’s easier to get into debt than save in Britain,” he says. “The interest payments only serve to compound individual and family’s personal financial problems, yet it is allowable – despite the lessons of the liquidity crisis. UK regulation continues to fail borrowers dismally, whereas the fair treatment of consumers has become a much more significant regulatory issue in savings and investments in recent years.”

During the credit crunch there seems to have been an explosion of adverts on our TV channels and radio stations for short-term high interest loans. My local radio station carries adverts for them and it makes my blood boil every time I hear them. As far as I’m concerned, these companies should not be allowed to advertise on TV or radio at all – end of story – and that’s why I’ve joined Ian’s group.

People who work in the industry argue that these high interest short-term loans are regulated by the Financial Services Authority, offer a much-needed life-line for people who have run out of cash before pay day comes and are a safer alternative to borrowing from a door-step loan shark. However, the charges are expensive and there is the danger that customers defer payment and run up large interest charges which they are unable to repay. Borrowing money from a local Credit Union or consulting the Citizen’s Advice Bureau or the Consumer Credit Counselling Service if you are experiencing serious debt problems are much better ideas in the long run. Check out a recent piece by MSN’s consumer champion Sarah Modlock about this and a useful article by the Consumer Credit Counselling Service.

The good news is that the Office of Fair Trading is investigating payday loans as part of an ongoing report into responsible lending and is expected to deliver its findings soon. Meanwhile Ian plans to write open letters to lenders including Quickquid and Wonga.com to call on them to cut their APRs and get MPs and consumer rights campaigners to back his campaign. “I am determined we can make a difference!” he says. Good on him!

If you feel strongly about this issue, then please make a stand by joining the Let’s Stop 2356% APR Loans group and helping Ian reach his target of 1,000 members or writing to your MP.

Have you used payday loans? What were your experiences? Leave a message and let me know.

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6 Responses to Say no to 2356% APR loans

  1. Flo says:

    People only seem to begin to realise the problem with such payday loans when they have to pay them back. Because it has been so easy to get credit, there seems to be no incentive to learn to budget either. Not that disasters never happen even if you are thrifty and good at budgeting, but if you can manage to put a little aside each week then the use of a credit union is a much wiser course than if borrowing on a credit card or on a payday loan. It may be a simple thing like not drawing on your pension or JSA or other benefit till one day later each week. Every so often you end up with a week\’s money in hand. Sometimes though, payday loans are used by people who really are living beyond their means. And for them budgeting would be a more more useful skill than further borrowing. It may be a creditable way to run such a worthy campaign by the by, but I steadfastly refuse to use social networking sites such as Facebook so will not be joining in. Some of us feel that there is far more to life than the use of things like Facebook – it\’s called talking to people. There were telephones before Facebook became the fashionable way to keep in contact with your family she says laughing.

  2. piper says:

    Good point, Flo. There should be more emphasis on teaching people how to put together a budget and cut back, although as you say, there will always been the times when something unexpected goes wrong and throws a spanner in the works. Re social networking sites – what are you doing on here if not talking to people?!

  3. Bill says:

    Lack of, or inadequate education is the root of most evil. Those who are not adequately literate/numerate have no real hope of survival. It would not be such a problem in the other (natural) jungle, where essential food, drink, clothing & housing are all basically independent of political currency.The bare minimum of literacy/numeracy enables us to write a shopping list, add items to it, delete from it, & stick to the list. We are able to compare prices on the list from various sources, thereby are able ter shop around.

  4. Flo says:

    Laughing at Piper. Not sure what I\’m doing here except putting the opposite point of view. The internet is actually one of the worst places on earth for honing social skills – it does nothing for you if you have to deal with real people. But Bill has the rights of it – people who struggle to manage their money often do have inadequate education of the basic sort in reading, writing and arithmetic. Instead of putting more and more subjects on the school lessons list, it would be far better if pupils had to actually sit in and understand the shopping for school dinners. It would do their reading, writing, weighing, measuring and budgeting skills more good than all the exams in the world.

  5. Bill says:

    Flo, darling, . . . many thanks fers compliment, I vaguely remember college in the late 60\’s. A possible 33% of us teeny students were Ladies, who spent at least 1 afternoon/week in the canteen kitchen, compulsory. As a mon, I would have volunteered fer it, & believe that we should all have done it, compulsory. Their bread & cakes were mostly edible, but I believe that I could have done much better after assisting my sick mother at home fers at least 10 years. Their traditional farmhouse savoury dishes, from fresh raw materials, were slightly better, under the watchful optic of the college Matron. Extreme frontline First-Aid, including Midwifery & Obstetrics was compulsory for us all. We were not there to become Medics, or even Nursing personnel.If I were President of UK, I would abolish all religion & Patriotism in all schools, & replace it with First-Aid, Home Nursing, Midwifery, Gardening including poultry, Basic slaughter of poultry & pigs, including all dressing out, cutting, boning & rolling. I would push maths & linguistics to the full, also a choice of musical instrument. I would also push yoga & basic Judo, also top notch Square-Bashing all as compulsory. Swimming, tennis & dancing would also be compulsory from 5 years of age. Footy & cricket would be banned. BSL/ISL/AUSLAN would be compulsory for all, including the Deaf/Blind alphabet.I would also push gliding, parachuting, free driving lessons & test, in that order, as compulsory for all. Canoeing, rowing & dinghy sailing would also be compulsory fers all. Morse, Semaphore, standard short-hand & typing would also be compulsory.This week I opened a new Social Group from scratch. 2 middle aged male students, & 1 middle aged, slim, short young Lady. She immediately complained that she was dislexic, & began her fust lesson in BSL/ISL/AUSLAN with 28 fingers, & 2 right hands.In far less than 2 hours, they had all mastered the alphabet from scratch, & can all introduce \’emselves to any Deaf in the world, including spelling their own name, & understanding the full name of any complete stranger. They are also able to greet any stranger, any place, at any time of day, correctly. I will double check all this in less than 10 minutes next week, complete with spelling bee.I also hope that they learn to count next week, from 1 – 10 billion. I may also introduce money, date & time next week. all in less than 2 hours.Hopefully I will have twice as many students next week, any age, weight or size.If the Lady was dyslexic, she cured herself completely inside the fust hour, without any help from me. I simply leave Mother Nature ter do the work, & just supervise vaguely, as little as necessary, from the touchline. As a tutor, I almost dozed off this week. I have another Social Group elsewhere, now 6 weeks old, they have almost covered a whole years work @ only 2 hours/week. The youngest is early twens, complete with a degree of some description, the oldest is in her mid 80\’s, & is keen ter begin with her IT education. They all beg fers more homework, I find it difficult ter prepare enough work each week. They are all so greedy fers this education. One has twenty years full ytime in the creche, & is now moving into adult education, but needs "special needs" on her cv to compete better fers employent. Another has left retail department store management after 20 years, to begin a new full time life in Problematic Youth Work. Again, "special needs" will improve her chances.The simplest, cheapest education can be extreme "life changing".I also find these Internet blogs extremely good fers me self-confidence. Previously I would have been far too shy too even speak to a common librarian. Now I email & phone top council/library management, & oft meet \’em face ter face, & have full staff access ter all library areas, including free printing/copying on staff computers, free use of video, free staff refreshments in all libraries. I also have similar staff access in 3 different charities, including all free refreshments, & have no problem holding a 2 hour lecture in front of 35 coppers, or even bank managers.As fer what I am doing here, I best leave you young Ladies ter decide that fers me!

  6. Bill says:

    p.s. . . . just brought me\’sen a new home today, a fantastic des res, fully detached, with all electric bathroom, fully fitted electric fridge, washing m/c/spin drier, gas cooking, gas/electric heating, completely Freehold, immediate vacant possession, only £1,200, cash. At such a fantastic price, I could easily afford a new un every 2 years. It is not only council tax free, but all heat, light & water is also free!

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