OFT give thumbs-up to high interest 'payday' lenders

15 June 2010

uk-money.jpg If you’ve ever been disgusted by one of those adverts for loan companies that offer typical interest rates of 2356% APR then you’ll be interested to learn that the Office Of Fair Trading don’t share your revulsion about it all.

The loans are normally short-term which explains the slightly-higher-than-normal interest rates, as lenders go for the quick buck from their borrowers. But the OFT say that the sort of people who go for these ‘payday’ loans aren’t serviced by regular banks and that there are relatively few complaints from within the sector.

It’s a booming business, with £7.5 billion believed to have been loaned short-term in 2008 but with a high incidence of missed or late repayments. But the OFT offered the payday lenders the a compliment, saying that they “show forbearance with repayment difficulties and do not penalise borrowers when payments are late or missed". Aw, bless.

Have you ever found yourself forced to take out a 2356% APR loan and did the transaction leave you with a smile on your face or your fingers crushed in a vice? We’re joking of course… or are we?

TOPICS:   Banking

20 comments

  • Codify
    The chavs who fall for these companies deserves everything they get. They can't be bothered to save up their dole money for a few weeks to buy their latest PS3 game, they want it all and they want it right now, using someone else's money. It's good for them to get a few pinkies chopped off by a burly debt collector every so often.
  • myrtle
    What a nonsense reply from Codify. What if they've borrowed money to pay for their groceries that month? Or they've had to borrow it for an unexpected expense such as a broken washing machine? Everyone has unexpected things to pay from time to time, but not everyone has the cash in pocket to keep up. It's often what starts the spiral of debt in the first place.
  • Chopper
    I think you will find that Codify is just trying to point out that chavvy cunts deserve all they get - a fair observation in anybodys eyes. Anyways......if you cant budget shopping a week in advance then you must be a complete tosser to risk a loan like this
  • grex9101
    @ myrtle What if... they got a decent job and stopped scrounging on the dole? What if... they learned how to save and budget? My heart bleeds, it really does. People really should start providing for themselves rather relying on pathetic excuses.
  • andy y.
    WTF IS DIS USURY?
  • jonstorm2000
    Right, before everybody jumps on the bandwagon slagging off everybody in site, there is a use for these kind of companies. If, for whatever reason, you can't get an overdraft at your bank, it is ACTUALLY CHEAPER to use these services until your next payday than make an unauthorised withdrawal from the robbers at your local bank, as long as it is very close to your payday. Just a thought.
  • i c.
    has anyone got a fox for sale?
  • Jack
    If people want to get dodgy high interest loans like this, it is up to them - let the knobheads live their lifestyle like this - they'll have to pay in the end.
  • Wonky H.
    You know the A in APR is "Annual".. right? *makes a worried face* Only the article author doesn't seem to realise this.. These types of 'loans' are designed for people who might need an extra.. say.. £50 for a friend's birthday they'd forgotten about, or replace a part unexpectantly damaged on a car. The name 'payday loan' rather implies the loan is designed to occur between the date it's taken out and the next pay day (usually within a week, for example). If you borrow £100, you'll end up paying ~£125. Not something I'd go for personally (I don't have too much pride to ask a friend or family member if I needed some cash for a couple of days). It's hardly rocket science, or misleading in anyway :S This types of posts exist only to bash 'chavs' and people desperate with money problems. However these loan companies do not cause the problems, and I can't see how they are remotely 'unfair'.
  • Lumoruk
    Washing Machine? I think we are all able to wash dishes for a month till we have enough money to buy a new one.
  • Steve
    Lumoruk, you are a twat.
  • george a.
    If you send my your bank account details madam....... i will have the monies put into your account...........
  • Masood
    What makes me laugh is how smiley the woman on the advert is about it.
  • Lumoruk's E.
    Lumoruk, you massive bell-end. Please stop putting your dishes in the washing machine, and go and get a "dishwasher" instead. Love, Your Mum
  • Rob
    These schemes are just an idiot tax.
  • cheapskate
    Interesting how it won't seem to let me post the link to Q uidco for this type of loan
  • stella
    Payday? More like Gayday.
  • singhster
    More great investigation from the OFT. At least their boss isn't on £260k a year for this sort of investigation. Oh wait..
  • Olly
    Once my mate bought some stuff in a shop and it came to £9.67. I paid for it as he didn't have the money on him. Then we walked out the shop, and went to the ATM. Ten minutes after I had lent him the money, he paid me back a tenner. That means the APR on that transaction was 173448%. Will the OFT investigate me?
  • Payday L.
    Wonderful website. A lot of helpful info here. I'm sending it to some friends ans also sharing in delicious. And of course, thank you for your effort!

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