Pay Day Loan musings :)

[dawny36]

Ive been reading through lots of posts on regarding pay day loans and a few things strike me.

 

Obviously people get pay day loans because there is no other form of credit available to them. These loans are extortionate but at times needs must.

 

As far as these loans are concerned the Pay Day companies are well aware that their lending is extreamly high risk. Most of them agree these loans over the internet or by telephone. Its literally taken on the word of the client that they will pay If a client defults then there is not really much that they can do but eventually swallow the loss.

 

So why do they do it? Is it because they can make so much money that they can deal with a number of losses? I know that they can peddle fear and get money out of people that way but people who know their rights or seek help in forums such as these can easily deal with these people.

 

I dont know really im just thinking out load but i wanted to know what you thought as well?

Edited June 17, 2010 by dawny36

[cornetgirl]

Hi Dawny,

 

You do make a lot of very sensible points, and my theory is this. A lot offer reloans so they are getting a tidy profit from the regular interest payments. if you think about how much it will cost to set up a couple of people in an office with a telephone line and a couple of computers their charges are way above that.

 

A lot of people who do take out PDLs (myself included) are often a poor credit risk or have previous debts, but like cigarettes I think the things should come with a health warning. There seems to be no regulation on the industry and as a result the more vulnerable can be driven to desperate measures. How long before the first PDL suicide I wonder?

 

I guess there are very few people who take them on so they make their profits there and swallow the losses from the savvy few?

[dawny36]

Yeah thats what i think. It saddens me that people get so freaked about debt but i can totally understand it being an ex bankrupt myself. When i first got into debt i was terrified but as time went on and with help from forums like these i realised i had a lot more rights than i thought i had.

 

Surely it cant be that much of a shock to these companies when people cant afford to pay them back because the debt spirals so quickly out of control and if they are not regulated then how on earth do they expect to get their money back anyway?

[cornetgirl]

TBH I'm not as scared about these lot, purely because I had debt problems a few years back and went through the whole not answering the phone or opening the post thing. Once you realise that being in debt is not a crime and that nobody has a right to make you feel bad about yourself it makes it easier. Not that I'm totally chilled about it - I'm a bit nervous but I know now what I can realistically afford and what I can do about it.

 

I think if they didn't offer a reloan facility and were just one-off tiny amounts it would work better - but greed is good, as Gordon Gecko said....

[Jamie Kingston]

Ive been reading through lots of posts on regarding pay day loans and a few things strike me.

 

Obviously people get pay day loans because there is no other form of credit available to them. These loans are extortionate but at times needs must.

 

As far as these loans are concerned the Pay Day companies are well aware that their lending is extreamly high risk. Most of them agree these loans over the internet or by telephone. Its literally taken on the word of the client that they will pay If a client defults then there is not really much that they can do but eventually swallow the loss.

 

So why do they do it? Is it because they can make so much money that they can deal with a number of losses? I know that they can peddle fear and get money out of people that way but people who know their rights or seek help in forums such as these can easily deal with these people.

 

I dont know really im just thinking out load but i wanted to know what you thought as well?

 

well from my own experience its not entirely true. i was taken to court by a payday loan company and ended up getting an attachment of earnings agasint my wages. I've learnt one to be honest and two dont let anyone push you to pay what you cannot afford but at the same time dont pay an amount that's never going to let you finish paying what you owe.

 

If they have a credit agreement they can enforce legally i'm sure.

[london84]

Hello - sorry to come onto this thread but i cant find the new thread button (can anyone help). Its not where it normally is at the top of the page!

 

I have looked through the forum but has anyone heard of a company called Payday Mania and if they are linked to another payday loan company?

 

Thanks

[dawny36]

Thats a shame Jamie.

 

Maybe it comes down to how much you owe?

 

Taking a person to court for a debt less than £500.00 when it costs £500.00 minimum in court fees seems a bit foolhardy but maybe some compaies do it because they get their teeth firmly into it.

Edited June 18, 2010 by dawny36

[Jamie Kingston]

also not true. The court fee's came up to about £60.00. They seem to do it online and it doesnt cost much to do at all.

[dawny36]

Oh ok lol. Just ignore me lol!

[pandasarecuuuuute]

But surely the reloans are effectively them losing out on the capital of the loan?

So for a loan where they expect £200 back at the end of the month they are only getting £50 to roll it over, losing them £150? They'll make it up in the long run, but these loans are designed purely to be there for a month.