www.iva.co.uk

Hi all
Hope you are all well and enjoying this fine weather we are having, I know I am [8D]

I find it absolutely shocking that in the last 2 weeks I have seen on telly no end of adverts for payday or short term loan companies with aprs at incredible rates such as 2600 odd %.

You would have thought that in todays financial climate and the rate of BR's and IVA's on the increase that this sort of advertising would not be allowed or at least restricted.

Part of the reason we got into trouble was I started to use these payday loan companies to pay bills etc... and well the rest is history.... as far as I am concerned these companies are no more than glorified loan sharks [:(!]

Sorry for the rant but was really shocked by this.
Take care all xx

I agree. I got into trouble with a similar company that offer these pay day loans. It was cash-4-cheques. Ended up being £1K over drawn and I only had £100 O/D. So easily done. I look back now and think what an idiot. But at the time, I just wanted some £££ so I could go out with my mates!

There is a need for these companies and to be fair the APRs do not properly reflect the costs. Most charge 25% extra for a short term loan with effectively no credit checks. Getting £100 paid into the bank to avoid unauthorised overdraft charges or bounced direct debit charges can be worth it.

These problems are caused by the unavailability of credit facilities to people on low incomes and the excessive charges imposed by the banks for the slightest mistake. I would not criticise these companies too harshly although like anything there are abuses.

Whilst I personally would not use one, and never even considered it, even when I was desperate, they are regulated.

At least you are left in no doubt as to the APR - it is down to choice as to whether you use them.

Much better than loan sharks, who do still operate. They don't mind how they get their money back.

Ive been guilty of using payday loans on a couple of occasions, luckily I could pay them back quite quickly. In my local town they have popped up everywhere recently in small booths. Its the closest thing to a loan shark you can get and should be a little bit more regulated.

Must admit I've never used them personally but do know my eldest daughter did a silly thing once! As others say the APR is high but advertised and they're regulated.

I read an article on money saving expert regarding these companies and while the APR is high some banks charge a higher rate for unauthorised overdrafts!!

What bothers me more is their apparent lack of affordability checks prior to lending,having said that TSB kept lending me money when I clearly couldnt afford it!!!

Paul

I have switched camps on the payday loans a few times due to having an understanding that there is a niche in the market for them, after all people have been cashing cheques early for a very long time and for a £100 cheque 1 days early they used to charge say £6 which is 6% of the amount borrowed but if you worked out the percentage over the year if the cash bounced it would be 2190% APR. With that system though due to the cheque guarantee it would be paid and then the bank would suffer the loss however at a significantly less percentage rate.

The danger with these payday loans is not the amount they charge for their services which isn't outrageous if you pay it back on time. The danger is when someone doesn't pay it back then the compound interest soon turns your £100 or £500 loan into something completely unpayable.

The problem with this is that say someone has a £500 loan and doesn't pay it because they lose their job whatever. Say they get pursued for 6 months for the money and the debtor hides their head in the sand. They would owe £2586 on that money however after 12 months it would be £13500 owed and after 2 years, wait for this lol. They would owe £364,500.

Suffice to say these interest rates are not for the light hearted and certainly not for the long term loan and if you do get into financial difficulty I would make the payday loan my priority payments next after any court ordered debt or council tax stuff you could go to jail for.

If you can pay them back on time then fine, but I doubt many people do.

Personally speaking, I have never cashed a cheque early at all. I wouldn't want to do so because it costs me!!!! I can see why people do though.

I see some new companies now are offering loans over 12 months. My daughter unfortunately (and unbeknown to us) took out payday loans and one of these. Thankfully, her very understanding fiance has bailed her out and paid them off. He has also made her close her bank accounts and have a joint one with him and he holds the cards!!!

Sensible lad there then Jan, we've all made mistakes, errror of judgements and so long as we learn by them then we'll be off the slippery road, I didn't learn however and ended up in an IVA (not through payday) and kept taking loans/cc increases offered to me as always around the corner it was going to be ok! Now I can really say it will be ok soon 100% as I've just sent off paperwork for 4th annual review so anxiously waiting for that to be returned, get a couple of mortgage rejections (which shouldn't be difficult) and hopefully I'll be on a single figure countdown soon. IVA was the best thing I did for my finances and only wish I'd done it sooner. x

I do hope you are Lesley - I know mine will continue for the further 12 months, no question about that.

I just hope my daughter has learned her lesson - I got really annoyed because she lied about it, even though they were phoning up all the time to speak to her and we saw the letters coming and knew they were nasty ones! Wouldn't mind if she couldn't see the bother we've had.

I do hope she has learned her lesson and bless her fiance for sticking by her!

Hopefully she will have, best to learn from a youngish age. My daughter has always known about an IVA and could recite a lot about it, she's the only one living at home so to be fair it's affected her the most and she's an old head on young shoulders so it's made her very aware of money.

What annoyed me not so long ago was she bought something from a High Street shop went to pay and it was a minimally priced item and she's 18 now and girl says you could save 10% by applying for a store card! No wonder people do it and yes I've done it but commission on sales and persuassion to some is all that's needed to get on the slippery road.

Thankfully they've stopped (or are stopping) that practise now.

It is very tempting though and you think, yes - I'll pay it off in full when the bill arrives, but you rarely do!!

I have never had a payday loan myself and whilst I do think they are extortionate and quite clearly some people get into a lot of trouble with them, I think that if they weren't there, these very same people would end up going to doorstep lenders, loan sharks etc which would be unregulated and probably end up in a whole lot of worse trouble! so whilst I have difficulty with payday loan companies, I'm sort of on the fence really and can see why they are there

I can appreciate what you are saying Lem, I never considered using them and would never, ever have used doorstep lenders or loan sharks.

I think the likes of those companies usually target those in social housing (and before anyone complains that I am a snob, my parents live in social housing) as their income is likely to be low and so they are easy to target, especially when it comes to Christmas and getting presents for the kids. Seen it such a lot on the local news programmes.

Trouble is that the loan sharks are unregulated and can charge what they like. Although the likes of Provident charge high interest rates they are at least regulated companies.