Re: UK unemployment rises to 2.68m : Wed Feb 15, 2012 5:19 pm  

Dally wrote:

It would certainly stop all this economic / welfare migration as well. Why come to work in a rat-infested, sweatshop for no pay in a cold, damp place like the UK when you could have the same lifestyle in a nice warm place in the sub-continent?

Three square meals a day. This what a legal immigrant said to me back in the 70's. No use having a beautiful place to live if your starving most of the time.

Re: UK unemployment rises to 2.68m : Wed Feb 15, 2012 5:52 pm  

Rock God X wrote:

Disgusting. The highest one I've seen is about 4000%. It really ought to be illegal to prey on people in this way.

It's happened for donkeys years and it isn't really preying on anyone. Certain people can't get access to cheap credit mainly because they have a record of non-repayment. As a result the interest rate applied reflects the risk. Also, because they are short term loans, the APR though accurate, isn't a true reflection of how much you pay back. If you borrow £100, you don't pay £4,100 back. You'd probably pay say £160, over a period of 20 weeks or so.

Something else to note is that most of these loan companies are owned or bankrolled, either directly or indirectly by mainstream banks.

Re: UK unemployment rises to 2.68m : Wed Feb 15, 2012 6:21 pm  

Ovavoo wrote:

It's happened for donkeys years and it isn't really preying on anyone. Certain people can't get access to cheap credit mainly because they have a record of non-repayment. As a result the interest rate applied reflects the risk. Also, because they are short term loans, the APR though accurate, isn't a true reflection of how much you pay back. If you borrow £100, you don't pay £4,100 back. You'd probably pay say £160, over a period of 20 weeks or so.

Something else to note is that most of these loan companies are owned or bankrolled, either directly or indirectly by mainstream banks.

See my previous responses to these points, made several weeks ago.

Re: UK unemployment rises to 2.68m : Wed Feb 15, 2012 7:35 pm  

Ovavoo wrote:

It's happened for donkeys years and it isn't really preying on anyone. Certain people can't get access to cheap credit mainly because they have a record of non-repayment. As a result the interest rate applied reflects the risk. Also, because they are short term loans, the APR though accurate, isn't a true reflection of how much you pay back. If you borrow £100, you don't pay £4,100 back. You'd probably pay say £160, over a period of 20 weeks or so.

Something else to note is that most of these loan companies are owned or bankrolled, either directly or indirectly by mainstream banks.

Well there's a lot more to it than a record of non-repayment. The lender wants some security that if the borrower defaults, they can get something back (ie its secured against an asset, ie their house or their business). If a borrower has neither a house nor a business they are a risk to a lender, whether they have a track record of repayment or not, because if the borrower defaults they can turn round and tell the lender to f off and it's very hard for the lender to actually get repayment. Yes they can use the legal system to slap a CCJ on the borrower and can harass them with phone calls, bailiff visits etc but to actually collect payment on a CCJ is expensive and often not worth it.

Before the crash lenders weren't as bothered about this as they had ways to sell the debt on and disguise how risky it was, so someone else would shoulder the risk, but now that's harder they have become more risk averse.

The consequence is young people are unlikely to get access to credit. Mortgage lenders are worried about giving a young person a mortgage to get a house and without property you won't get cheap credit.

Re: UK unemployment rises to 2.68m : Thu Feb 16, 2012 11:53 am  

Ovavoo wrote:

It's happened for donkeys years and it isn't really preying on anyone. Certain people can't get access to cheap credit mainly because they have a record of non-repayment. As a result the interest rate applied reflects the risk. Also, because they are short term loans, the APR though accurate, isn't a true reflection of how much you pay back. If you borrow £100, you don't pay £4,100 back. You'd probably pay say £160, over a period of 20 weeks or so...

People who need such small loans will, generally, be fairly poor to start with. So £60 interest is a not peanuts.

It's like the whole thing with people who are poor ending up paying more in ATM charges because they usually have to withdraw smaller amounts, possibly more frequently.

Ovavoo wrote:

Something else to note is that most of these loan companies are owned or bankrolled, either directly or indirectly by mainstream banks.

That's probably not much of an argument in their favour.

Re: UK unemployment rises to 2.68m : Thu Feb 16, 2012 12:50 pm  

Mintball wrote:

People who need such small loans will, generally, be fairly poor to start with. So £60 interest is a not peanuts.

It's like the whole thing with people who are poor ending up paying more in ATM charges because they usually have to withdraw smaller amounts, possibly more frequently.

That's probably not much of an argument in their favour.

And inevitably those ATM's that charge, in my experience, are always the ONLY ones that can be found in what could be considered to be "poor" areas, mainly because they are kept inside premises rather than being on outside walls.

My office in Leeds is in what I consider a "poor" area, there are no external cash machines in this area and only the post office has an internal one that doesn't charge although the last time I used it it had changed to Bank of Ireland with a message that some cards would be charged for.

My office in Birmingham is also in what I consider a "poor" area (we can certainly pick them ), there are no external cash machines for miles and I have yet to find an internal cash point that does not charge - when you only want £10 then being charge 15% for the privilege of obtaining it is steep.

Re: UK unemployment rises to 2.68m : Thu Feb 16, 2012 1:42 pm  

McLaren_Field wrote:

And inevitably those ATM's that charge, in my experience, are always the ONLY ones that can be found in what could be considered to be "poor" areas, mainly because they are kept inside premises rather than being on outside walls.

My office in Leeds is in what I consider a "poor" area, there are no external cash machines in this area and only the post office has an internal one that doesn't charge although the last time I used it it had changed to Bank of Ireland with a message that some cards would be charged for.

My office in Birmingham is also in what I consider a "poor" area (we can certainly pick them ), there are no external cash machines for miles and I have yet to find an internal cash point that does not charge - when you only want £10 then being charge 15% for the privilege of obtaining it is steep.

Indeed. We have a couple of external ones now locally (what with the revival of Broadway Market and there being a lot more quite trendy people visiting the area for lunch, a bit of shopping etc), but they all have charges too. The internal ones are in exactly the shops that have largely served the poorer people in our community for years – and they all charge.

Now the demographic is changing for a variety of reasons, but certainly, if you're poor in our area, you won't easily be able to access cash without paying for it. You'd have to travel at least a mile/mile and a half to reach a bank.

Re: UK unemployment rises to 2.68m : Thu Feb 16, 2012 2:05 pm  

I'd reckon the supermarket chains offer the most widespread access to cash nowadays; most I know of have at least one cash machine (which doesn't charge) outside, and many will do a cashback of up to £50 at the till, again no charge.

Re: UK unemployment rises to 2.68m : Fri Feb 17, 2012 3:36 pm  

Mintball wrote:

People who need such small loans will, generally, be fairly poor to start with. So £60 interest is a not peanuts.

It's like the whole thing with people who are poor ending up paying more in ATM charges because they usually have to withdraw smaller amounts, possibly more frequently.

That's probably not much of an argument in their favour.

Not saying £60 interest on £100 is peanuts and not defending in anyway the practise. Just saying that risk bring it's own rewards and penalties. As for the banks, I made this point to show that although they will not lend directly to high risk customers they will do it indirectly.

Re: UK unemployment rises to 2.68m : Fri Feb 17, 2012 3:51 pm  

sally cinnamon wrote:

Well there's a lot more to it than a record of non-repayment. The lender wants some security that if the borrower defaults, they can get something back (ie its secured against an asset, ie their house or their business). If a borrower has neither a house nor a business they are a risk to a lender, whether they have a track record of repayment or not, because if the borrower defaults they can turn round and tell the lender to f off and it's very hard for the lender to actually get repayment. Yes they can use the legal system to slap a CCJ on the borrower and can harass them with phone calls, bailiff visits etc but to actually collect payment on a CCJ is expensive and often not worth it.

Before the crash lenders weren't as bothered about this as they had ways to sell the debt on and disguise how risky it was, so someone else would shoulder the risk, but now that's harder they have become more risk averse.

The consequence is young people are unlikely to get access to credit. Mortgage lenders are worried about giving a young person a mortgage to get a house and without property you won't get cheap credit.

To be fair, it was always the case that young people would struggle to get finance. Credit scoring used to be based on 3 simple principles, stability of income, stability of abode and proof of being able to afford the re-payments. These are exactly the things that young people in general can't show.

When we bought our first home, you had to save with a building society for a minimum of 2 years before they would even consider you for a mortgage. If at any time in those 2 years you missed a week or two, there was a stewards enquiry. Remember being questioned by a very severe woman as to why we had a couple of blanks on our savings record and I said we'd been on holiday. I may as well have said I'd killed the queen. She said so if we grant you a mortgage and you decide to go and enjoy yourself in Wales or Cornwall does that mean you wont pay your bills???
Good job I didn't tell her we'd gone to Ibiza.