Company offers loan with 2.6 million % APR

[Mark R]

A loan firm has come under fire after charging one client an annual interest rate of more than 2.6 million per cent.

An unnamed woman in York took out a one week loan for £320 with the firm Early Pay Day Loans, which attracted £80 in interest over the seven-day period.

Text

If you have usury laws where you live, all I can say is, 'be grateful'.

This really is stooping to new depths and helps no one - indeed, this is surely the equivalent of handing out nooses to people who are at rock bottom.

 

[HombrePequeno]

Did she not read the contract before she signed it?

You don't even get that bad of rates from money lenders in the third world.

 

[Whoozyerdaddy]

It's a payday advance loan. This is not a new thing. These companies are everywhere. Need money now? Here ya go. We get this much from your next paycheck.

Yes they suck. But... who else is going to loan these people the money? It's an expensive service to be sure, but apparently the market has a need for such services.

All that said, personal financial responsibility FTW.

 

[wirelessenabled]

Total BS.

No difference between this and the brass knuckles folks. The brass knuckles go to jail and these folks go to the hall of fame.

 

[piasabird]

How is this different from how credit cards work. It is common for a credit card company to offer you credit at 12% or lower and then cleverly craft the agreement where when you miss your first payment they can bumb up the rate to around 29%.

 

[Pabster]

Originally posted by: piasabird
How is this different from how credit cards work. It is common for a credit card company to offer you credit at 12% or lower and then cleverly craft the agreement where when you miss your first payment they can bumb up the rate to around 29%.

Actually, it is often 30 or even 35%.

That said, it would still be cheaper than a payday loan shark. They're the lowest of low, but hey, there's a demand and they're filling it. If people don't read the agreement and understand the price they're paying for that loan, no one to blame but themselves.

 

[HombrePequeno]

Originally posted by: piasabird
How is this different from how credit cards work. It is common for a credit card company to offer you credit at 12% or lower and then cleverly craft the agreement where when you miss your first payment they can bumb up the rate to around 29%.

Well this is different because 1) the interest rate is a hell of a lot higher than 30% and 2) because the interest rate was 2.6 million percent without them missing a payment.

A credit card company forcing you to pay more if you miss your first payment isn't "clever," it's smart business. You're in much higher risk of default if you miss payments thus with that higher risk is a higher interest rate.

 

[JS80]

idiots...they should say $79 processing fee, $1 interest...

 

[HombrePequeno]

Originally posted by: JS80
idiots...they should say $79 processing fee, $1 interest...

That's how my university does it. They offer short term loans (3 month) that have no interest attached to them but the processing fee makes it come out to 5% of the maximum amount borrowed.

 

[MovingTarget]

Payday/title loans, huh? Say what you want about everything being in the fine print, the fact of the matter is that they are predatory. The terms are meant to be deceptive on the surface, even if they do hold up under further scrutiny. When you see ads for CASH NOW NO CREDIT CHECK GET THE MONEY YOU NEED NO HASSLE CASH!!!!! people will inevitably fall for it no matter how short-sighted they are. Long-term means nothing when you are living paycheck to paycheck. You do what you need to survive to the next day. With the way the economy has been for the working class, this occurs more and more each day. Gas prices rising, mortgage rates skyrocketing, medical bills through the roof....all these things are severely hurting the middle class.

These places need to have a short leash on them as they cater to society's most vulnerable. They are a blight on society.

 

[Rainsford]

Originally posted by: MovingTarget
Payday/title loans, huh? Say what you want about everything being in the fine print, the fact of the matter is that they are predatory. The terms are meant to be deceptive on the surface, even if they do hold up under further scrutiny. When you see ads for CASH NOW NO CREDIT CHECK GET THE MONEY YOU NEED NO HASSLE CASH!!!!! people will inevitably fall for it no matter how short-sighted they are. Long-term means nothing when you are living paycheck to paycheck. You do what you need to survive to the next day. With the way the economy has been for the working class, this occurs more and more each day. Gas prices rising, mortgage rates skyrocketing, medical bills through the roof....all these things are severely hurting the middle class.

These places need to have a short leash on them as they cater to society's most vulnerable. They are a blight on society.

Really, this is a good example of the philosophical liberal/conservative divide. Poor people who get taken in by scam loans like this are either vulnerable people who deserve to be protected by the government, or people who intentionally make poor decisions and then expect help dealing with the consequences. The fundamental question here is whether or not you think people who do things like take loan shark type loans are really capable of making better decisions. If they aren't, then conservatives are just being assholes...but if they ARE, then liberals are just encouraging more bad choices.

Personally, I take the liberal point of view with stuff like this. Mostly because I can't imagine many people identifying the bad choice, and then intentionally doing it. What kind of person would both understand really bad loan terms AND choose to take the loan?

 

[Slew Foot]

If people are stupid enough to take the loan when the terms are spelled out in front of them, more power to people that offer it. Dont ask me to bail you out though.

 

[HombrePequeno]

Originally posted by: Rainsford

Originally posted by: MovingTarget
Payday/title loans, huh? Say what you want about everything being in the fine print, the fact of the matter is that they are predatory. The terms are meant to be deceptive on the surface, even if they do hold up under further scrutiny. When you see ads for CASH NOW NO CREDIT CHECK GET THE MONEY YOU NEED NO HASSLE CASH!!!!! people will inevitably fall for it no matter how short-sighted they are. Long-term means nothing when you are living paycheck to paycheck. You do what you need to survive to the next day. With the way the economy has been for the working class, this occurs more and more each day. Gas prices rising, mortgage rates skyrocketing, medical bills through the roof....all these things are severely hurting the middle class.

These places need to have a short leash on them as they cater to society's most vulnerable. They are a blight on society.

Really, this is a good example of the philosophical liberal/conservative divide. Poor people who get taken in by scam loans like this are either vulnerable people who deserve to be protected by the government, or people who intentionally make poor decisions and then expect help dealing with the consequences. The fundamental question here is whether or not you think people who do things like take loan shark type loans are really capable of making better decisions. If they aren't, then conservatives are just being assholes...but if they ARE, then liberals are just encouraging more bad choices.

Personally, I take the liberal point of view with stuff like this. Mostly because I can't imagine many people identifying the bad choice, and then intentionally doing it. What kind of person would both understand really bad loan terms AND choose to take the loan?

I guess I take the more conservative approach when it comes to payday loans. You'd have to be completely retarded to not realize it's a bad deal. If they get screwed, well it's a lesson to teach them how to read, really.

There are lots of other financial contracts that are wolves in sheep's clothing but payday loans should just be assumed to be crappy.

 

[RichardE]

Originally posted by: Rainsford

Originally posted by: MovingTarget
Payday/title loans, huh? Say what you want about everything being in the fine print, the fact of the matter is that they are predatory. The terms are meant to be deceptive on the surface, even if they do hold up under further scrutiny. When you see ads for CASH NOW NO CREDIT CHECK GET THE MONEY YOU NEED NO HASSLE CASH!!!!! people will inevitably fall for it no matter how short-sighted they are. Long-term means nothing when you are living paycheck to paycheck. You do what you need to survive to the next day. With the way the economy has been for the working class, this occurs more and more each day. Gas prices rising, mortgage rates skyrocketing, medical bills through the roof....all these things are severely hurting the middle class.

These places need to have a short leash on them as they cater to society's most vulnerable. They are a blight on society.

Really, this is a good example of the philosophical liberal/conservative divide. Poor people who get taken in by scam loans like this are either vulnerable people who deserve to be protected by the government, or people who intentionally make poor decisions and then expect help dealing with the consequences. The fundamental question here is whether or not you think people who do things like take loan shark type loans are really capable of making better decisions. If they aren't, then conservatives are just being assholes...but if they ARE, then liberals are just encouraging more bad choices.

Personally, I take the liberal point of view with stuff like this. Mostly because I can't imagine many people identifying the bad choice, and then intentionally doing it. What kind of person would both understand really bad loan terms AND choose to take the loan?

Its easy to look down from a pedestal

 

[wwswimming]

No difference between this and the brass knuckles folks. The brass knuckles go to jail and these folks go to the hall of fame.

i used to share a weight room with one of the brass
knuckles folks. "debt counselor", leg-breaker,
whatever term you want to use. he did 10 years behind
bars, related to work he did on the East Coast, then
moved to SoCal. and, as it turns out, went back into
the loan business, without the brass knuckles.

he was actually one of the most honest people i've
ever met. not skilled at artifice (lying). he started
talking to me because he thought i was into some
kind of martial art; i was doing a leg stretch on the
Smith Press (one foot on the floor, the other
5 feet off the ground).

i mostly listened respectfully while he talked.
he was 6' 6" & about 60 years old. used to do
full contact tournament boxing, including at
Madison Square Garden.

also, very involved in his church. he had a
very imposing method of recruiting new members.
"accept JC as your Savior (or i'll kick your @$$)".
he was hyper-fixated on his church. one word
of questioning, of anything related to his form
of evangical Christianity, which included being a
Republican, and he would get REAL upset.

i have a feeling that the reason he was so fixated
on his church, on the need for Forgiveness, was
that he did things that needed forgiving. i'm
pretty sure he was also a retired hit-man. i
went to his church a few times.

 

[Fern]

Bah, this is so much BS.

You can't a have business loaning a few hundred dollars (or British pounds in this case) at a time.

As someone alludes to, it's really the loan processing fee that makes this look scandalous.

Short term loans for a small amount are always gonna be expensive unless you can arrange it like a revolving CC.

Fern

 

[wetech]

Originally posted by: Fern
Bah, this is so much BS.

You can't a have business loaning a few hundred dollars (or British pounds in this case) at a time.

Fern

Sure you can. Figure sterling short term rates are at 6% right now. 1 week's interest on 320 is £0.37. Ka-Ching.

 

[Fern]

Originally posted by: wetech

Originally posted by: Fern
Bah, this is so much BS.

You can't a have business loaning a few hundred dollars (or British pounds in this case) at a time.

Fern

Sure you can. Figure sterling short term rates are at 6% right now. 1 week's interest on 320 is £0.37. Ka-Ching.

Shhhh. You gotta keep good business plans like taht to yourself. No need to let others in for free

Fern