Short term loan = loan shark?

Anyone else worried by the outrageous APR of short terms loans that are on TV alot at the moment:

I mean representative 1734% APR, isn’t that obscene?

So If I borrow 1000 pounds for a month I end up paying back £2450 roughly?!

Lots of people are. Including the Office of Fair Trading:

guardian.co.uk/money/2012/fe … igated-oft

I’m not worried, though, because I’m not stupid enough to take out a loan for 1743%. I think its up to people to make their own financial decisions. If they are incapable of making good ones, then evidently they will have to pay the cost of it. The amounts and interest rates are generally clearly stated.

At the end of the day - what’s it got to do with the government or society in general? Its a private contract between two parties. In my mind, protecting people from thier own idiocy is not within the government’s mandate.

No it’s obviously the OFTs mandate.

Frankly shady business practice is what you expect from the finance sector as a whole, I should now I worked for an insurance broker for a while and what they do is much less obviously exploitative.

Once I had to prove to my bank manager I had no bad credit history, I felt that was fair as I wanted a £50 overdraft a credit report I downloaded was completely blank showing I’d never so much owned a credit card or borrowed money, this meant though that obviously I was a bad credit risk kinda buy default, which was hilarious. So because I am good with money and I don’t like borrowing I am a bad investment, ah that figures. :slight_smile:

. However I don’t think such computer says no checks and measure apply when banking online or borrowing on line. The money is paid into your account in 10 minutes often.

outrageous yes…but people need to start educating themselves…the basic responsibility lies with the person taking the loan…they lose…maybe they learn…this brings up bailouts of all kinds…especially the obscene too big to fail…to big to learn…

Yeah but you object to regulations on bank lending do you?

It probably is - hasn’t actually been decided yet), but if it is, it shouldn’t be. People should be free to make whatever idiotic decisions they want.

In my mind, the OFT should check that people are not being misled or misinformed about the loans they are taking out. Otherwise, these companies should be left alone.

Well the Bailiff charges are horrendous.

i definitely want banks regulated…i want the focus of worry to be on why the banks are ruling the country…

I don’t have a problem with short-term lending.

I really don’t have a problem with anything that someone agrees to of their own free will and volition. In the case of actual physical locations, it’s all there in black and white, and in most jurisdictions they have to show the payback amount and the actual interest rate you are paying expressed in APR. In that case, you sign everything related to the loan. For the ones that happen over the phone, you have to provide your Social Security Number, Checking Account Number…and everything else…and then there is a disclosure where the payback amount and interest expressed as APR will be related to you and you must consent with a clear, “Yes,” usually twice.

I also have no problem with laws that are designed to regulate such short-term lending. Technically, it’s illegal in the State of Ohio, (and a few locations closed) but you can have what is known as a, “Brokered Loan.” I believe that the maximum APR they can charge is 28%, but they can charge that 28% all at once on a thirty-one day loan, or may adjust it accordingly for shorter loans based on a percentage of thirty-one days. In other words, the maximum in interest you can pay on $1,000 borrowed over thirty-one days is $28. They make the bulk of their money with, “Loan origination fees,” now.

In any case, it can be a good tool for people that use it correctly, but I also think most people should be aware of other options such as deferring a student loan, car loan, or mortgage loan payment for a month. Most places will let you do that without a fee, but the unpaid interest for that period gets added to the principal.

In this world of international financial fraud where markets are manipulated by banking institutions nothing really surprises me.

I know what you mean but you are a retard for signing up to that APR.

Me either, finance is a world of shityness and exploitation.

One thing we might just agree on is idiots deserve all they get, but it pains me to see idiots get rolled over unless I am playing poker against them. :smiley:

I did no such thing.

That idea works on the individual level, but the recent economic crisis started precisely because the banking industry started making bad loans in general - and made incredible amounts of money off these bad loans - knew these were bad loans, knew the government would bail out industries, knew that their personal earnings were safe and caused unbelievable amounts of suffering worldwise.

Sure, but there are reasons that regardless of transparency banks cannot make whatever loan specifications they like. People in need of feeding their families or about to lose their homes/businesses or with health care issues, will take those loans and pray then can manage it. Honesty in advertising is generally considered not enough control on loans.

One of those parties is a bank that gets to create money out of nothing every time it loans out money. It loans out money it does not have and is not owed. Any real capital it has or can call in can be loaned out many times over. It is given this power (one I think is really quite evil) by governments. Aside from the potential worldwide damage bad loan practices can create, there is a good reason to keep this hallucinatory power under check even on an individual level. ( I mean, imagine if I could loan out ten times all of my capital at interest AND THERE WAS NO WAY to hold me accountable for that personally if my loans failed. Sure a bank could go under - though they tend to get bailed out by governments and they demand this - but the individual bankers would not be in debt. You want to have that much priviledge, priviledges none of wee mortals have, and you get these powers via government, well, you damn well better expect some oversight. Who do you think banks turn to when people refuse to or cannot repay loans? Ultimately local governments and law enforcement will makes sure seizures and repossessions take place and resistence will lead to prison, again at public expense.

it’s a great scam, make money out of nothing, just type it into a computer, but demand payment in real dollars and real capital.