A loan company that charges up to 4000% APR on loans to low-income workers and the unemployed asked to write a piece on this blog.
I received an email from one of their loan sharks in a suit, stating: “Since noticing you’ve accepted guest posts on in the past [I haven’t], I wondered if you’d extend me the opportunity to also write a guest post for your website.
“If so I will research and compose an original article specifically written for your site, on any topic of your choosing. I only ask that you let me put a discreet link to my own website, [I refuse to name it], at the end of my post.
“You wouldn’t have to do anything other than review/approve my completed article to make sure that it coincides with the theme of your site.”
I wish I’d responded by asking for an article on the dangers of loan sharks and how charging enormous interest of the low-paid in loans just days before Christmas is a cruel, vile con but I said no. I did though compare them to loan sharks.
Imagine having children desperate for the latest toy and no money to buy it or no money to buy the Christmas dinner: this could easily drive you into the arms of a “pay day loan” company eager to make you pay four thousand times what you borrowed to buy some gadget or other when you can’t afford a fast repayment.
One financial website reports “R3, the insolvency trade body that represents “professionals working with financially troubled individuals and businesses”, says 3.5 million people are considering taking out a payday loan over the next six months.
“If the people R3 surveyed who did take out a payday loan, 60% wished they hadn’t and around half (48%) said it had left them worse off. Only 13% said their payday loan had improved their situation.
“R3 also found that one in six people are only servicing the interest on their debts every month, earning them the nickname “zombie debtors” – and that 60% of people are worried about their current level of debt, the highest proportion it has ever recorded”
If the debt isn’t repaid quickly it will grow quickly.
I refuse to name them – because I think any advertising would please them – but will state some of the APR outlined on moneysupermarket.com: 1737% – 1734% – 4217% – 1737.2%
This means that you pay between £20 and £25 in interest if you pay within 15 days, 28 days, 30 days or 38 days – depending on the company – but the huge annual percentage rate if you can’t pay back in this time.
The Office of Fair Trading is planning tighter control of “payday loan” firms through greater powers to suspend their credit licences and the Church of England has called on the government to limit the cost of loans. Most European countries have restrictions in place, as do American states, but in Britain lenders are free to charge what they like.
In the meantime they can find somewhere else to ply their nasty trade. Now I’m off out to get drunk.