Pay day loan competition

[Silver_Shiney]

Thank you for clearing that up, Gill.

Back to the main thrust of the topic, then!!

[Gill W]

I knew that 28 years at the Halifax would come in handy one day!

[Manoverboard]

I was following this Topic without difficulty ... but who's this feller Justin Welby that Ray's on about ?

[Kendhni]

Thanks Gill, that is interesting ... obviously things have changed over the last few years.
There is no way I would have held deeds at my house, but it appears I don't have to worry about that any more

Anyhoos, the most important aspect me to me is the line of credit that keeping the mortgage open provides me with ... with 99.76% equity in my house i can spend the money on things we want a little wine/beer, a little song, (Julie doesn't allow me additional women, little or otherwise) and holidays and cruises ... the important things in life

[Kendhni]

On a slightly different note, some banks are stress testing people at up to 7% ... if they don't think that they can afford the loan when interest raters go up to that level (and it is possible they will within the next 10 years), then they are not granting the loan without additional securities. If only they had done that in the noughties instead of giving 100% mortgages.

[oldbluefox]

On the continent they have 60/80/100 year mortgages which bring down monthly repayments. I always thought what a good idea it was. I wonder if that would be a means of reducing monthly mortgages and by extending the payment period would reduce the number of repossessions especially when interest rates rise.

[Kendhni]

OBF, I have been a great advocate of longer term mortgages for many years (particularly 40 year mortgages ... ie. the average working life). They do have their pros and cons though.

Longer mortgages can fuel house price inflation, which is possibly one of the reasons why the previous government would not introduce them (simply because, back then, it was obvious that housing was already at a highly inflated price). It also means that by the time you pay for your property you will have paid many times it value ... inflation may not have kept track with this. In some parts of Asia I am led to believe that a mortgage is often passed down the generations.

Having said that, I can see a couple of big scenarios where they could prove to be very beneficial. Firstly, many people prefer to pay off their mortgages early. Therefore by taking out a long term mortgage to start with and then, as they get pay rises etc. they can pay chunks off and bring the term back down to more reasonable levels ... more or less as happens today, but could be controlled automatically. Secondly, if someone falls on hard times they could be moved onto a long term mortgage that reduces payments taking part of the pressure off them.

The only problem is that at the minute interest rates are being kept artificially low to help home owners through this recession ... this will not last and rates will start to rise in the next few years ... and as has history shows us there will be a 'bounce' effect whereby they will go past their natural rate and then come back down a bit again.

[The Monocled Mutineer]

Although not an adherent to the CoE, and despite Welby "caught with egg on his face via unintentional cock-up", I wish the CoE well in their campaign.

A side benefit will be the end of those annoying, stupid WONGA ads (the puppets remind me of atypical UKIP supporters!).

Derek Kane

[Kendhni]

I have been looking through some of the deals on offer, something I used to do regularly, but no longer have to

The problem with many though is the extortionate buy in charges which skew the true value of the deal (and are a con to those who do not do their homework properly). There are some very good long term deals that give a repayment/purchase rate of about 1.3-1.4 (based on todays rates) .. some do not even have a buy-in other than some equity in the property.

[oldbluefox]

Am I missing something here?
I have never looked at Wonga before but I do feel they are getting a bad press which is largely undeserved. You decide how much you want to borrow and you agree when you are going to pay it off. They then tell you how much the loan will cost so you are not buying into the contract blindly. Nobody is forced into using them.
The problem seems to arise when people do not pay off the loan and the longer they let it drift on (whether on a can't pay or won't pay basis) the higher the interest payable.
I was brought up to believe if you can't afford something don't buy it, save your money till you can afford it. Apart from taking out a mortgage I have never taken out HP for anything largely because I feel why pay extra for something when you can have it at the original price by waiting and saving up for it?
The problem is we live in a materialistic 'must have' society whether we can afford it or not and people who can least afford it take out loan after loan until it becomes totally unmanageable. The solution is not to make it easier to take out loans but to put a top limit on loans (based on ability to pay) and prevent more loans being taken out until that limit has been reduced.
It seems so simple there must be a catch somewhere. Over to you...........

[david63]

Am I missing something here?

Yes ObF there is one thing that you are missing.

With Wonga, other "payday" load companies may be different, the problem is that their system is flawed in such a way that it encourages crime. When someone takes out a loan they have to provide a debit card from which the repayment can be taken at the end of the loan but, unfortunately, no checks are made on that card to ensure that it is valid and belongs to the person taking out the loan.

You are right in that the information is provided as to what the loan costs but the majority of people taking out this type of loan are probably so desperate that they either do not read it, do not understand it or are not bothered by it.

[oldbluefox]

Thank you David for clarification.

[Kendhni]

David, I don't know if they have tightened up on that loophole yet ... but they did say they were going to.

[Romig1]

Although not an adherent to the CoE (or indeed any other cult that wraps itself in the nonsense of superstition and 'the afterlife') and despite Welby "caught with egg on his face via unintentional cock-up", I wish the CoE well in their campaign.

A side benefit will be the end of those annoying, stupid WONGA ads (the puppets remind me of atypical UKIP supporters!).

Derek Kane

We saw a group of "old dears" on Azura this year who reminded me of the Wonga girls...needless to say that's what I christened them.

[Dark Knight]

seems to me that a capped interest rate would go a long way to curbing the problem
that said as far as I know thee is nothing illegal about this

perhaps people should take more care when taking out this type of loan and read the small print, no point whinging about it later

[Silver_Shiney]

seems to me that a capped interest rate would go a long way to curbing the problem
that said as far as I know thee is nothing illegal about this

perhaps people should take more care when taking out this type of loan and read the small print, no point whinging about it later

Illegal, almost certainly not. Immoral....?

You are, as usual, right. People should take more care in these transactions and read the small print. However, therein lies another issue - how many times have you seen reams of "small print", in a very small font, couched in legal terms that are indecipherable to the layman? I'm sure I've signed my life away many times because I can't be "armed" ( ) to wade through this gibberish.

[Romig1]

So the adverts say "How much for how long - here's what it will cost you" (or words to that effect). Do we honestly believe that the majority of the customers don't know that it will cost more if the loan isn't paid back as arranged?

[Dark Knight]

Romig

excessive interest aside
I can't see anything wrong with, you borrow X over X months and it costs you this much
seems failry clear to most people, the problem comes when they can't or don't pay it back and compound the loan by taking out another one and so it spirals
to be blunt sounds like some people are too stupid to understand what they are doing and cant afford the loan in the first place
I find I have very limited sympathy for them

[Silver_Shiney]

Romig

excessive interest aside
I can't see anything wrong with, you borrow X over X months and it costs you this much
seems failry clear to most people, the problem comes when they can't or don't pay it back and compound the loan by taking out another one and so it spirals
to be blunt sounds like some people are too stupid to understand what they are doing and cant afford the loan in the first place
I find I have very limited sympathy for them

To my mind, a lot of the problem is that if they are taking out a "payday" loan, because they had too much month left at the end of the money, they are likely to be as short, if not shorter of cash, the following month.

[Manoverboard]

I find I have very limited sympathy for them ...

Nor me ... but when I stop to think about it ... cannot be easy in some cases and although I am anti Nanny State with a passion there are times when people do need to be protected from themselves.

There has to be a control in place and a chance for them to recover from their debts but it has to be achieved through sacrifice rather than handouts.

[Silver_Shiney]

I find I have very limited sympathy for them ...

Nor me ... but when I stop to think about it ... cannot be easy in some cases and although I am anti Nanny State with a passion there are times when people do need to be protected from themselves.

There has to be a control in place and a chance for them to recover from their debts but it has to be achieved through sacrifice rather than handouts.

I understand there is (was?) a scheme whereby debts could be written off. I'd have no problem with excessive interest charges being written off but surely capital (plus reasonable interest) should be made to be repaid? Why should genuine, reputable lenders bear the loss?

[Romig1]

I find I have very limited sympathy for them ...

Nor me ... but when I stop to think about it ... cannot be easy in some cases and although I am anti Nanny State with a passion there are times when people do need to be protected from themselves.

There has to be a control in place and a chance for them to recover from their debts but it has to be achieved through sacrifice rather than handouts.

I must agree with all the above. Also, as has been intimated previously on this thread, there is also a major problem with the lack of understanding the difference between "need" and "want" and until society as a whole accepts that difference, we will have problems.

[Dark Knight]

Moby
as I posted earlier a cap on interest rates charged by any lender should be imposed, that said anyone seeing interest rates of 1000% plus should be savvy enough to know they are going to get fleeced
Also anyone refused a loan from an established lenders knows why they are refused, even if the deny all knowledge and if a legal loan shark is their only answer, then once again my sympathy is very very limited