Pay day loan competition

[Kendhni]

It looks like pay day loan companies could be in for a bit of competition from an unusual source ... the church.

Maybe Wonga will force the church out of business

[ChesterfieldJohn]

It looks like pay day loan companies could be in for a bit of competition from an unusual source ... the church.

Maybe Wonga will force the church out of business

LOL that would be brilliant no religion, cut down on wars and terrorism straight away

John

[david63]

Having been on the receiving end of the misuse of Wonga anything that shuts them down will get my vote.

[Kendhni]

Oh dear, it appears the CoE invested (indirectly) in Wonga ... ducks not lined up neatly.

On one hand it is a good idea, however it will only work for the church if they rely on an army of people offering their services for free ... but then maybe that is what the church should have been doing years before now, providing charity to the less well off.

[Silver_Shiney]

Oh dear, it appears the CoE invested (indirectly) in Wonga ... ducks not lined up neatly.

On one hand it is a good idea, however it will only work for the church if they rely on an army of people offering their services for free ... but then maybe that is what the church should have been doing years before now, providing charity to the less well off.

That's what the Christian church HAS been doing for the last 2,000 years, Ken. What the Establishment "religious" church has been doing is another matter

[Silver_Shiney]

I would be very happy to see the likes of Wonga shut down - their interest rates are extortionate. People don't seem to realise that if they are desparately short of cash one month, and they borrow against their next pay cheque, the chances are very high that they will be just as desparately short the following month.

[david63]

I have always found it somewhat at odds that the Church Commissioners (I think that is who I mean) is one of (if not the) wealthiest land and property owners in the country and the C of E has massive funds yet they continually bemoan the fact that they are hard up and/or do nothing to alleviate poverty in this or any other country.

[david63]

I would be very happy to see the likes of Wonga shut down - their interest rates are extortionate. People don't seem to realise that if they are desparately short of cash one month, and they borrow against their next pay cheque, the chances are very high that they will be just as desparately short the following month.

There are two problems with Wonga:

1. As you say SS they prey in the vulnerable who are desperate for money, so desperate in fact, that they either do not read the small print, do not understand it ot just ignore it.

2. Theit operation is seriously flawed in that no checks are made to ensure that there is the correct means of paying the money back is available, basically as it is not in their interest because the longer the debt runs the more interest they will earn - assuming that they do ever get their money back.

[Silver_Shiney]

I have always found it somewhat at odds that the Church Commissioners (I think that is who I mean) is one of (if not the) wealthiest land and property owners in the country and the C of E has massive funds yet they continually bemoan the fact that they are hard up and/or do nothing to alleviate poverty in this or any other country.

That's what I mean by the "Establishment 'Religious' Church"

[Dark Knight]

is this about pay day loans or religion?
if it about pay day loans then yes they should be banned
if it is about religion, I say kill em all and let God decide

[Ray Scully]

Despite his embarrassment over the Wonga affair I DO rate Justin Welby, he seems more of a realist than previous incumbents.

Ray

[Delboy]

Oops another topic, which could escalate re religion, think I will opt out of this one.

But before I go, I will just say the established church like the C of E, need to get their own house in order first, before worrying about somebody else's.

[sumdumbloke]

Despite his embarrassment over the Wonga affair I DO rate Justin Welby, he seems more of a realist than previous incumbents.

Ray

Agree.

Did you hear him today on the Radio 4 Today programme 8.10 slot? He handled John Humphries much more cleverly than most politicians do. He seems a real breath of fresh air.

[Boris+]

Whilst donning the flak jacket and helmet and running for cover ........ this is my personal opinion and there are perhaps some who won't like it, but:

I don't think it is the loan companies who are to blame - I think that if we are going to play the 'blame game' (which I usually avoid like the plague) then perhaps it might help if there weren't so many foreign workers in the UK, and then it might help a bit more if (and this is a big 'if') people stopped being slaves to advertising and marketing - and therefore stopped being quite so materialistic and didn't live beyond their means.

There's all this pressure on people to buy stuff - and I think that is morally wrong.

Em

[Silver_Shiney]

Quite right, Em.

I might buy a packet of biscuits and (while the Lady C is out and can't see..) think to myself "I think I'll have a couple of biscuits". What's the problem? They're mine to start with.

One of these payday lenders used to have a poster in the window of an attractive young lady looking wistfully into middle distance with the caption "I think I'll take £200 today" - as if it was already hers to take. It isn't. It's got to be paid at high interest, which isn't made clear in the poster.

Another poster, from the same company (I think it was The Money Shop), posed the question "what would you do with £500 today?".



Regarding the CoE having money invested in Wonga that it was not aware of, it wasn't directly investing, it was "several layers removed". I expect some of my investments are putting money into things I don't approve of (eg tobacco) but I don't have the time or the expertise to dig deeper - and that's only one layer. I don't think the Church Commissioners could have been reasonably expected to investigate in such depth but, now that this has been exposed, I commend Marcus Welby for the action he is taking.

[david63]

I don't think it is the loan companies who are to blame

Of course they are to blame - if they did not exist then there would not be the problem.

However I will concede that this is only the modern day equivalent of the "corner of the street moneylender" - there has always been someone out the capitalise on the weak and vulnerable.

The problem with the likes of Wonga is that they are creating another level of crime.

[Silver_Shiney]

I don't think it is the loan companies who are to blame

Of course they are to blame - if they did not exist then there would not be the problem.

However I will concede that this is only the modern day equivalent of the "corner of the street moneylender" - there has always been someone out the capitalise on the weak and vulnerable.

Oops, missed that bit of Em's post. While I don't think they are solely to blame, they are making a bad situation unnecessarily worse by the levels of interest they charge. So they must shoulder at least some of the blame.

Having said that, her comments about migrant workers taking jobs that British people should be doing is spot on, IMHO. Even legitimate forms of lending is too easy to obtain. And need we mention the scandal of self-certified mortgages?

[Boris+]

Hi Alan,

I used to think that some advertising was innocent, and then I changed my mind to think that it was subtle - now I think - 'why don't you just stick to the facts?'.

For instance - a run of the mill liquid cleaner for use in a kitchen or bathroom. Ok, all we need to know is who sells it, how much is it, does it have a use by date, and is there any harmful stuff in it. What do we get in an advert - a huge sexy kitchen or bathroom! So, people buy the 'branded' (and more costly) stuff because they associate the product with owning a big sexy kitchen or bathroom (whether they do in fact have one or not). By the same token (just another example) a car will never be advertised with a driver who is unkempt or shabbily dressed, and then there are these adverts using celebrities.

When I was younger there weren't all these 'association' adverts, a product was sold for it's cost and performance. People are encouraged to spend money which they sometimes just don't have. That is the situation which I am going to label as the root cause - the effect is that people then borrow money. Nasty horrid vicious circle.

Em

[Silver_Shiney]

I do agree, Em, but do the likes of Wonga have to exacerbate the problem with high interest rates?

I do know what you mean about the power of advertising. In the days when I burnt tobacco, I used to aspire after Rothmans, simply because of the advertising pictures of a hand holding one, dress in a captain's (four rings on the sleeve) uniform resting on the gear stick of an opulent car.

Similarly, the Money Shop's ad that I mentioned early featured a well-groomed "sexy chick". Would it not be more accurate if they portrayed the victi... sorry, customer as a shabbily dressed, ill-kemp individual who is obviously down on their luck?

[Kendhni]

I would be very happy to see the likes of Wonga shut down - their interest rates are extortionate.

The headline grabbing interest rates are extortionate looking but they are just meaningless numbers when talking about short term loans.

As I understand it Wonga charges 1% on the original loan amount per day (for a maximum of 60 days) plus a set up fee of about £5 per loan. This basically means that to borrow £100 it will cost you £1 per day, plus a one off £5(ish) set up fee. What makes the headline figures is extrapolating these numbers out over a year ... but they do not offer loans for a year.

Did you know that by the time you pay your mortgage out (at an average percentage rate over the past 25 years or so) then it will have cost you more than £2 for every £1 you borrowed ... and that excludes arrangement fees for 'special deals' that you may have entered into (which could add another £10-20K). If you told people that they would actually have to pay double the price of their house to own it that would be more accurate than talking about APR's of 5-6%.

I am not defending them, or any other loan provider, in any way, but I think we have to be more realistic about how the numbers are presented ... and especially consider the context in which a loan is being made. One suggestion would be that one loan must be repaid before another can be sought.

[Boris+]

This is potentially going to come out all wrong - but bear with me - this problem needs to be attacked at the roots. The roots in this case are probably the advertising which leads to pressure to spend on daft stuff. Maybe a contributing factor is the inability which some people have to create a meal from scratch, or to do simple mental arithmetic to work out when a deal in a shop really is a good deal (eg in a supermarket) - to this needs addressing by education - but it is neither a quick nor an easy 'fix'.

It is clear that the people who find themselves in need of a loan can't or won't approach a regular bank, and so they go to the 'money lenders'. If these people couldn't get money from a 'money lender' what might then they do - turn to crime?

If they turned to crime and got caught, then the spiral goes even further downward - fines to be paid or a custodial sentence ...... it goes from bad to worse.

So looking at the picture from that aspect, which is the lesser of the two evils: going to a money lender or turning to crime? (.... and all because of advertising and peer pressure!).

Em

[david63]

The problem is, Em, that these people use the "money lenders" (e.g. Wonga) and also turn to crime to avoid paying the money back.

[Boris+]

It's such a rotten shame - how on earth can people climb out of this nasty spiral once they are in it?

Not a very nice experience I imagine.

Em

[Dark Knight]

sorry Ken
you wrong it is nowhere near £2.00 per pound, as I have just got a new mortgage and I know the figure and your figures are no where near being right
a bit like the headline interest rates of loan sharks, legal or not

[david63]

DK - you are probably right based on the current low levels of mortgage interest rates but taking the average mortgage rate of the last 25 years, which is in the region of 6%, (possibly slightly higher), then I think that Ken's figures are not that far out - you will end up paying roughly double the amount borrowed.

And I would not like to think what it would be if we went back to the bad old days when mortgage interest rates were up at 15%